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Cornell University Law Library 

The Moak Collection 

PURCHASED FOR 

The School of Law of Cornell University 

And Presented February 14. >893 

IN HEnORY OF 
JUDGE DOUGLASS BOARDMAN 

FIRST DEAN OF THE SCHOOL , , 

By his Wife and Daughter 
A. M. BOARDMAN and ELLEN D. WILLIAMS 



Cornell University 
Library 



The original of tiiis book is in 
tine Cornell University Library. 

There are no known copyright restrictions in 
the United States on the use of the text. 



http://www.archive.org/cletails/cu31924069596413 



LEADING CASES 



COMMERCIAL LAW 



01' 



EIGLAl^D AID SCOTLAND. 



V 



SELECTED AND A^ANGED^ IN, SfS^^EMATIC ORDEE, 



as, 
GEORGE BigSS, ESQ., ADVOCATE, 

AUTHOR OF 
."LEADIITO OASES IN THE LAW OP SCOTLAlfD." 



VOLUME FIRST. 



PHILADELPHIA: 
T. & J. W. JOHNSON, LAW BOOKSELLERS, 

' KO. 19r CHESTNUT STREET. 

1854. 



KITE & WALTON. 



PEERAGE. 



The design of the present work is to illustrate the Commercial Law 
of England and Scotland by systematizing the Leading Judgments of 
the Courts of the two countries. In discoursing on the state of the law 
in America, Mr. Story observes, — " The mass of the law is accumulating 
with an almost incredible rapidity, and with the accumulation the labour 
of students as well as professors is seriously augmented. It is impossi- 
ble not to look without some discouragement upon the ponderous volumes 
which the next half century will add to the groaning shelves of our 
jurists. The habits of generalization which will be acquired and per- 
fected by the liberal studies which I have ventured to recommend, will 
do something to avert the fearful calamity which threatens us of being 
buried alive, not in the Catacombs, but in the labyrinths of the Law." 

Mere abstract propositions of Law do not satisfy the Student. He 
wishes to see the principles contained in these propositions applied to 
actual cases ; but the multitude of cases to which he is referred in sup. 
port of any single proposition forms a serious obstacle to the Student's 
progress. He has neither time nor inclination to undertake an examina- 
tion of them all, and he is at a loss to determine which he ought to 
select. By separating, therefore, the principal Leading Cases in the Law 
from the accumulated mass of Decisions, it is hoped that the labours 
both of the Student and the Practitioner may be lessened. 

The work, however, is not intended as one of reference merely. Its 
characteristic feature is that of " teaching by examples." *A ^ ^. -. 
continuous perusal of it, therefore, it is hoped, may prove profit- '- -^ 
able to all who are desirous of being deeply conversant with the princi- 
ples of Commercial Law. To those desirous of acquiring such know- 
ledge there can be no more instructive reading than the Leading Judg- 
ments of the Court, accompanied by the arguments of Counsel and- the 
opinions of the Bench. 

Mr. Chitty, to whom the Law of England is so much indebted, 



iv PEEPAOE. 

observes, — " The works of professional writers, however able they may 
be, can rarely be deemed more than well digested and analytical Summa- 
ries of our Courts. A treatise upon any legal subject is but a collec- 
tion of inferences from adjudged cases. For the purpose of argument 
and of satisfactory solution of any difficulty, it is essential to refer to the 
Reports themselves, and to consult the language which the Judges have 
adopted in delivering their opinions. It is only from the Reports that 
the grounds of decision can be ascertained with certainty." 

The first branch of Commercial Law now illustrated is that relating 
to Bills of Exchange and Promissory Notes, the elucidation of which 
was so much advanced by the Judgments of Lord Mansfield. "In 
truth," Mr. Story observes, " the Law of Bills of Exchange and Promis- 
sory Notes, and other negotiable paper, has mainly grown up since Lord 
Mansfield came upon the Bench; and we owe more to his labours on this 
subject than to any other single judicial mind, although vast contribu- 
tions have been made to the subject by the learned and able Judges who 
have succeeded him." 

The points of difierence in the Law of England and the Law of Scot- 
land in regard to Bills of Exchange and Promissory Notes are so few, 
that it was thought unnecessary to separate the cases decided by the 
Courts of the two countries. It is diflferent, however, with the Contract 
of Sale. The primary principles of the two systems of jurisprudence 
relative to that Contract being essentially different, although the results 
in each very nearly coincide, a different course will be adopted. 

In the Index of Matters it has been attempted to arrange under appro- 
priate heads the various Principles of Law which have been established 
or recognised in the Decisions contained in the body of the Work. 



INDEX OF CASES. 



The pages referred to are those within brackets [ 



Adamsoa t. Heylen 266 

Aitken v. Corrie . 349 

Alderson t. Langdale Til 

Allan T. Littlejoin 546 

AUenby T. Oamidge 366 
Ancher v. The Bank of England 279 

Anderson's Trnstee v. Hill 648 

Andrews v. Franklin 14 

Andrews y. Windle 641 

Ashby T. Tomkins 55 

Ashlin T. Mahoney ' 474 

Atkinson v. Holliday 127 

Atkinson r. Hawdon 714 

Austin V. Jeffries 141 



B. 



Ballingalls v. Gloster 277 

Banbury v. Lisset 34 

Bank of England y. Ancher 279 
Bank of England v. De La Chau- 

mette 792 

Bank of England v. Newman 357 

Bank of England t. Solomons 217 

Barandon v. Treuttel 283 

Barber t. Mills 134 

Baring v. De Tastet 719 

Barough v. White 329 

Barrie t. Wallace 144 

Bateman t. Joseph 603 

Bathe t. Taylor 705 

Bell V. Firbank 71 

Bellamy v. Majoribanks 604 

Belsh V. Fergusson 646 

Bennett T. Farnell 116 

Bennett t. Williamson 15 

Bethune y. Fergusson 731 
Bethune v. Horsburgh 730, 737 

Bereridge v. Swinton 233 

Bickerdike t. BoUman 508 

Blackburne ex parte 365 

Blackhouse v. Harrison 245 

Bland v. Eobinson 774 



Blesard v. Hirst 


396 


Boehm v. Sterling 


316 


Boheme v. Smith 


14 


BoUman y. Bickerdike 


508 


Bolton y. Dugdale 


8 


Bowman y. JSichol 


50. 698 


Box V. King 


49 


Bray y. Hadwen 


602 


Briant v. Philpot 


634 


Bristow y. Eidout 


175 



British Linen Oo. y. Drummond 841 
British Linen Go. Bank y. Souter 349 

Brown y. Dayies 313 

Brown y. Harraden 594 

Brown y. M'Dermot 583 

Brown v. Maffey 535 

Brown v. Potter 786 

Brown y. Tindal 494 
Brown's Executors y. Thorn's Eepre- 

sentatiyes 124 

Burdekin y. Eobertson 812 

Burleigh y. Stott 721 

Burnett y. Farnell 116 

Burrough v. Moss 336 

0. 

Callendar y. Willocks 151 

Camidge y. AUenby 366 

Campbell y. Campbell 16 
Campbell y. Dryden 148, 149 

Campbell y. Hill 147 

Carlos y. Fancourt 4 

Cazenove y. Hoare 567 

Chalmers y. Lanion 332 

Chapman y. Keane 547 

Chauntry y. Martin 14 
Chiene v. Western Bank of Scotland 37 

Chippendale y. Harrisons 366 

Chrichton y. Gibson 51 

Christie y. Henderson 749 

Clarence y. Crutchley 165 

Claridge y. Dalton 529 



VI 



INDEX or OASES. 



Clark V. Fydell 357 

Clarke v. Ooclf 444 

Clarke v. Shee 226 

Clayton v. Gosling 125 

Cock V. Clarke 444 

Colehan v. Cooke 18 

Ceilings t. Johnson 439 

Collins V. Emly 71 

Collins T. Emmett 115 

Collins T. Martin 140 

Cooke V. Colehan 18 

Corney r. Rothschild 331 

Corrie t. Aitken 349 

Cory T. Scott 541 

Cowan T. Kay 561 

Cox V. Kershaw 50 

Cox T. Troy 480 

Crawford t. Woolsey 120 

Orawfurd v. The Eoyal Bank 229 

Cranston v. Fair - 160 

Crook V. Jadis 244 

Crutchley v. Clarence 165 

Cubitt T. Gill 235 

D. 

Dalley Y. Goodall 398 

Dalton V. Olaridge 529 

Darbishire v. Parker . 499 

Darley t. English 637 

Darnley v. Kirkwood 739 

Danncey v. XTshef 165 

Davies t. Brown 313 

Dawkes v. Earl De Lorane 27 

Dennis v. Morrice 535 

De Bergareche v. Pillin 581 

De Costa r. Grant 121 

D'Eguino v. Muilman 414 
De La Ohaumette v. The Bank of 

England 792 

De La Vega v. Vianna 878 

De Lorane (Earl of) v. Dawkes 27 

De Tastet t. Baring 719 

Dingwall v. Dunster 486 

Don V. Lippman 847 

Douglas (Duke of) v. M'Dowal 36 

Down T. Hailing 325 
Drummond t. British Linen Co, 841 
Dryden v. Campbell 148, 149 

Dugdale v. Bolton 8 

Dunn T. O'Keefe 400 

Duncan t. Milnes 653 

Duncan v. Scott 143 
Dunlop V. Pierson 34. 434 

Dunster t. Dingwall 486 

E. 

East India Company v. Edie 298 

Edie V. Bast India Company 298 

Emly V. Collins 71 

Emmett V. Collins 115 

English T. Darley 637 

Esdaile v. Sowerby 589 



Evans and Sanson v. Heath 


129 


Evans v. Underwood 
F. 
Fair v. Ci'anston 


14 


160 


Fairlie v. Herring 


471 


Pancourt t. Carlos 


4 


Farnell v. Burnett 


116 


Fenn v. Harrison 


350 


Fentum v. Pocock 


489 


Fergusson t. Belsh 


646 


Fergusson v. Bethune, 


731 


Firbank v. Bell 


71 


Fisher v. Leslie 


70 


Frame t. M'Indoe 


738 


Francis v. Tinson 


329 


Franklin v. Andrews 


14 


Free v. Hawkins 


.166 


Fry T. Hill 


431 


Fuller T. Hall 


183 


Fydell v. Clark 


357 


G. 




Gamock (Viscount) v. Duke of 




Queensberry 


10 


Geary v. Physic 


201 


Gent T, Rhodes 


583 


George's Trustees v. Hunter 


149 


Germaine t. Williams 


573 


Gibson v. Ohrichton 


51 


Gibson t. Hunter 


116, 118 


Gibson v. Minet 


76, 117 


Gill T. Cubitt 


235 


Gill T. Isles 


73 


Gillespie v. Graham 


195 


Gloster v. Ballingalla 


277 


Goodall V, Dalley 


398 


Goodall V. Ray 


341 


Goodfellow T. Madder 


148 


Goodman v. Harvey 


251 


Goss V. Nelson 


25 


Gosling T. Clayton 


125 


Gould V. Robson 


631 


Goupy V. Harden 


431 


Gouthit V. Nicholson 


586 


Graham v. Gillespie 


195 


Graham v. Hoare 


181 


Graham v. Wightmau 


151 


Grant v. De Costa 


121 


Grant v. Vaughan 


39 


Grote V. Young 


187 


Gwynne v. Tye 


143 



Hadwen v. Bray 
Hall V. Fuller , 
Halliday v. Atkinson 
Hailing v. Down 
Haly V. Lane 
Harden v. Goupy 
Hardy v. Boscow 



602 
183 
127 
325 
141- 
431 
619 



INDEX 01' OASES. 



VU 



Harle t. Jenny 


33 


Kirkwood v. Darnley 


739 


Hanford v. Moseley 


182 


Knill V. Williams ^ 


7oo 


Hansard v. Robinson 


649 


Knox V. Smith 142 


,640 


Harraden v. Btowa 


594 






Harris v. Tatlock 


111 


L. 




Harrison r. Blackhouse 


245 






Harrison v. Fenn 


350 


Laing v. Scot 


122 


Harrisons v. Chippendale 


366 


Lambton v. Marshall 


231 


Harvey t. Goodman 


251 


Lancashire v. Leeds 


15 


Hawdon r. Atkinson 


T14 


Lane v. Haly 


141 


Hawkins T. Free 


166 


Langdale v. Alderson 


711 


Headfort (Marquis of) T. Rees 


144 


Langley v. Hogg 


646 


Heatli y. Sanson and Evans 


129 


Langstaffe v. Russel 


151 


Henderson v. Christie 


749 


Lanion r. Chalmers 


332 


Herring t. Fairlle 


471 


Lascerre v. Jocelin 


33 


Heylyn v. Adamson 


266 


Laurie v. Ogilvy 


72 


Hibbert r. Jones 


143 


Lawson v. Weston 


233 


Highmore t. Primrose 


125 


Ledwick v. White 


118 


Hill V. Anderson's Trustee 


648 


Lee T. Morris 


13 


HiU V. Campbell 


147 


Leech v. Turner 


621 


Hill V. Fry 


431 


Leeds v. Lancashire 


15 


HiU V. Lewis 


60 


Leftley v. Mills 


595 


Hirst V. Blesard 


396 


Legge T. Thorpe 


523 


Hirst V. Pease 


725 


Leslie v. Fisher 


70 


Hoare v. Cazenove 


567 


Leslie v. Robertson 


16 


Hoare v. Graham 


181 


Lewis T. Hill 


50 


Hogg V. Langley 


546 


Lewis V. Vere 115 


,117 


HoUiday v. Atkinson 


127 


Lifford V. Scott 


601 


Home v. Redfearn 


13 


Lippman v. Don 


847 


Horsburgh v. Bethuue 


730, 737 


Lisset T. Banbury 


34 


Houston T. Plumber 


349 


Littlejohn v. Allan 


546 


Houston T. Yuille 


737 


Lloyd T. Sigourney 


286 


Howden v. Wood 


748 


Lodge T. Phelps 


877 


Hunter v.^, George's Trustees 


149 


Lorane (Earl De) v. Dawkes 


27 


Hunter v. Gibson 


116, 118 


Lumley v. Palmer 


464 


Hutchinson v. Taylor 


73 


M. 




I. 




M'Dennot v. Brown 


583 


Isles V. Gill 


73 


M'Dowal T. The Duke of Douglas 


36 


Israel v. Israel 


70 


M'Gibbon v. the Managers of the 
Woollen Manufactory at New 




J. 




Mills 


35 






M'Gowan r.M'Kellar 


335 


Jadis V. Crook 


244 


M'Indoe v. Frame 


738 


Jeffrey v. Robertson 


146 


M'Kellar t. M'Gowan 


335 


Jeffries t. Austin 


141 


M'Leod V. Saee 


34 


Jenny v. Harle 


33 


Madder v. Goodfellow 


148 


Jocelin v. Lascerre 


33 


Maddocks v. Webber 


710 


Johnson v. CoUinga 


439 


Maffey t. Brown 


535 


Jones T. Hibbert 


143 


Maginnis v. Orr 


520 


Jones V. Ryde 


389 


Mahoney v. Ashlin 


474 


Jones V. Simpson 


52 


Managers of the Woollen Manufac- 




Joseph V. Bateman 


603 


tory at New Mills t. M'Gibbon 


35 






Majoribanks v. Bellamy 


604 


K. 




Marshall v. Lambton • 


231 






Martens v. Tapley 


362 


Kay V. Cowan 


561 


Martin T. Chauntry 


14 


Keane v. Chapman 


547 


Martin v. Collins 


140 


Kendall v. Smith 


47 


Martin v. Morgan 


660 


Kensington v. Robertson 


311 


Master v. Miller 


667 


Keppen v. MiUer 


150 


Mather r. Taylor 


329 


Kershaw T. Cox 


50 


Matthews v. Sproat 


475 


King V. Box 


49 


llayor v. Milford 


551 



vm 



INDEX OP CASES. 



Hellish V. Rawdon 
Melllsh V. Sii^eon 
Mercer v. Smith 
Mierop v. Pillans 
Milford T. Mayor 
Mills T. Barber 
Mills V. Leftley 
Miller v. Keppen 
Miller v. Master 
Miller t. Eace 
Milnes v. Duncan 
Minet v. Gibson 
Mingay v. Snaith 
Monroe v. Sutherland 
Morgan v. Martin 
Morgan v. Richardson 
Morrice v. Dennis 
Morris v. Lee 
Morse v. Owenson 
Moseley v. Hanford 
Moss T. Burrough 
Moss T. Ogilvie 
Muilman t. D'Eguino 
MuUett V. Smith 
Mutford T. Walcot 

N. 

Neal V. Price 

Nelson t. Goss 

Newman t. Bank of England 

Nichol T. Bowman 

Nicholson v. Gouthit 

Nightingale t.' Smith 



0. 



O'Keefe t. Dunn 
Ogilvie V. Moss 
Ogilvy T. Laurie 
Orr T. Maginnis 
Owenson v. Morse 



Pagan v. Wylie 
Palmer v. Lumley 
Parker v. Darbishire 
Pateman t. Joseph 
Peacock v. Rhodes 
Peake v. Roberts 
Pease v. Hirst 
Phelps T. Lodge 
Philpot v. Briant 
Physio V. Geary 
Pierson v. Dunlop 
Pillans T. Mierop 
Pillin V. De Bergareche 
Pirie v. Smith 
Plimley v. Westley 
Plumber t. Houston 
Pooock T. Fentum 
Pole T. Wookey 



421 
116 
379 
464 
551 
134 
596 
150 
667 
205 
653 
76, 117 
154 

75 
660 
142 
535 

13 
358 
182 
336 
162 
414 
601 
329 



376 
25 

357 
50, 698 

586 
15 



400 
162 
72 
520 
358 



194 

464 

499 

603 

213 

1 

725 

877 

634 

201 

34, 434 

464 

581 

56 

51 

349 

489 

251 



Potter V. Brown 
Potts T. Reid 
Price V. Neal 
Primrose t. Highmore 
Proctor T. Rhode 

Q. 



78S 
297 
376 
125 
562 



Queensberry (Duke of) t. Viscount 
Garnock 10 



PoUoc, Gilmour, & Co. v. Wilson 147 



Race T. Miller 


205 


Raikes t. Wynne 


458 


Rawdon v. Mellish 


421 


Rawson t. Walker 


181 


Ray V. Goodall 


341 


Redfearn t. Home 


13 


Rees V. Marquis of Headfort 


144 


Reid V. Potts 


297 


Rhode T. Proctor 


562 


Rhodes v. Gent 


583 


Rhodes v. Peacock 


213 


Rich V. TTther 


251 


Richardson v. Morgan 


142 


Rickford v. Ridge 


592 


Ridge V. Rickford 


592 


Ridout V. Bristow 


175 


Roberts v. Peake 


1 


Roberts t. Wiffen 


141, 592 


Robertson v. Burdekin 


812 


Robertson t. Jeffrey 


146 


Robertson t. Kensington 


311 


Robertson v. Leslie 


16 


Robins t. Shute 


432 


Robinson v. Bland 


774 


Robinson v. Hansard 


649 


Robson T. Gould 


631 


Rogers v. Stephens 


514 


Roscow T. Hardy 


619 


Rothschild t. Corney 


331 


Royal Bank v. Crawfurd 


229 


Russel T. Langstaffe 


151 


Ryde v. Jones 

S. 
Sansom and Evans v. Heath 


389 


129 


Scot V. Laing 


122 


Scott V. Cory 


541 


Scott V. Duncan 


143 


Scott V. Lifford 


601 


Scott V. Taylor 


74 


Sharp V. Thomson 


146 


Shee V. Clarke 


226 


Shute v. Robins 


432 


Sigourney v. Lloyd 


286 


Simeon v. Mellish 


716 


Simpson v. Jones 


52 


Smith V. Boheme 


14 


Smith V. Kendall 


47 


Smith V. Knox 


142, 640 


Smith V. Mercer 


379 



INDEX OF OASES. 



IX 



Smith V. MuUett 


601 


Usher v. Dauncey 


165 


Smith T. Nightingale 


15 


Uther r. Rich 


251 


Smith V. Pirie 


56 






Smith V. Taylor 


165 


V. 




Smith T. ■Williams 


59T 






Snaith v. Mingay 


154 


Vaughan v. Grant 


39 


Snee v. M'Leod 


34 


Vere v. Lewis 


115,117 


Solomon t. Turner 


142 


Vianna v. De La Vega 


878 


Solomons v. The Bank of England 


217 


Vignier v. Trimbey 


804 


Souter T. British Linen Co. Bank 


349 






Sowerby v. Esdaile 


589 


W. 




Spoouer v. Woodbridge 


172 






Sproat T. Matthews 


475 


Walcot V. Mutford 


329 


Stephens v. Rogers 


514 


Walker v. Rawson 


181 


Sterling r. Boehm 


316 


Walker t. Whitehead 


552 


Stott V. Burleigh 


721 


Wallace v. Barrie 


144 


St. Quintin v. Walwyn 


623 


Walwyn t. St. Quintin 


623 


Sutherland v. Monro 


75 


Webber v. Maddocks 


710 


Swinton v. Beveridge 


233 


Western Bank of Scotland v 


Chiene 37 






Westley v. Pimley 


51 


T. 




Weston V. Lawson 


233 






White V. Barough 


329 


Tapley v. Martens 


362 


White V. Ledwick 


118 


Tatlock V. Harris 


117 


Whitehead v. Walker 


552 


Taylor t. Bathe 


705 


Wi£fen v. Roberts 


141, 592 


Taylor T. Hutchinson 


73 


Wightman v. Graham 


151 


Taylor y. Mather 


329 


Wilkie V. Wilson 


333 


Taylor v. Scott 


74 


Williams v. Germalne 


573 


Taylor v. Smith 


165 


Williams v. Knill 


700 


Thom's Representatives v. Brown's 




Williams v. Smith 


597 


Trustees 


124 


Williamson v. Bennett 


15 


Thomson v. Sharp 


146 


Willocks y. Callendar 


151 


Thorpe v. Legge 


523 


Wilson V. Police, Gilmour & Co. 147 


Tindal v. Brown 


494 


Wilson 7. Wilkie 


333 


Tinson v. Francis 


329 


Windle v. Andrews 


641 


Tomkins v. Ashby 


55 


Wood T. Howdeu 


748 


Treuttel t. Barandon 


283 


Woodbridge v. Spooner 


172 


Trimbey t. Vignier 


804 


Wookey v. Pole 


251 


Troy T. Cox 


480 


Woolsey T. Crawford 


720 


Turner v. Leech 


621 


Wylie T. Pagan 


194 


Turner r. Solomon 


142 


Wynne v. Raikes 


458 


Tye V. Gwynne 


143 


Y. 




TT. 




Young V. Grote 


187 


Underwood v. Brans 


14 


Yuille V. Houston 


737 



LEADING CASES 



COMMEKCIAL LAW OF ENGLAND AND SCOTLAND. 



BILLS OF EXCHANGE AND PROMISSORY NOTES. 

IN OKDER TO ENTITLE BILLS 03? EXCHANGE AND PEOMISSORT NOTES TO 
THE PRIVILEGES ATTACHED TO INSTRUMENTS 01" THAT DESCRIPTION, 
THET MUST BE FOR THE PAYMENT OE A SUM OF MONET, AND THE SUM 
MUST BE CERTAIN, AND THE PAYMENT ABSOLUTE. 

I.— ROBEKTS V. PEAKE. 

May 17, 1757.— E. 1 Burr. 325. 

This was an actiou upon a promissory note, brought by the indorsee. 
The. note bore to have been made by the defendant and another party, 
but was signed by the defendant only. It was in these terms : — " We 
(naming the defendant and another person) promise to pay to A. B. or 
order £116, lis. (value received) on the death of John Henshaw, pro- 
vided he leaves either of us sufficient to pay the said sum, or if we shall 
be otherwise able to pay it." 

The declaration was upon the note as absolutely and in all events pay- 
able on the death of John Henshaw, although upon the face of it to have 
been given upon two several conditions. 

Argued for the Plaintiff. — Two questions arise upon this case. First, 
Whether this be a negotiable note ? *Second, Whether this note p^n- 
supports the declaration, which is upon an absolute note payable on L J 
the death of John Henshaw 1 

First Point. — There can be no doubt that if the note had not had the 
proviso added to it, but had merely been made payable on the death of 
John Henshaw, it would have been a good negotiable promissory note, 
within the Statute of 3 and 4 Anne, c. 9. The contingency of the death 
of G. H. is not such an uncertain contingency, as that the event may 
possibly or probably never happen, and so the note perhaps never become 



12 BOSS ON OOMMEEOIAIi I.AW. 

payable : but it is an event certain and necessary, and no otherwise, nor 
in any other respect, uncertain, than merely as to the particular time 
when it will happen. So that it is no more than the ordinary case of a 
promissory note payable at a future day. 

In support of the doctrine that it is a negotiable note, the case of Cook 
V. Colehan, 2 Strange, 1217, is fully in point; being " to pay within six 
weeks after the defendant's father's death." The case of Andrews v. 
Frankland, 1 Strange, 24, is still stronger, being « to pay within two 
months after a ship shall be paid off." 

Then as to the proviso or condition. The note is made absolutely 
payable, on John Henshaw's death, an event which will certainly happen. 
.Therefore the'proviso is repugnant to the body of the note. The present 
case resembles that of Wells v. Tregusan, in 2 Salk. 463 ; and the case 
in 21 B. 4, 36, and Brooke, Obligation 58. 

Second Point. — The note will support the declaration. The first ob- 
jection is, " that the note is only laid as the defendant's several note," 
whereas it imports upon the face of it to be made by two parties jointly. 
Answer. — Perhaps one only signed it ; or if the other did also sign it, it 
was nevertheless equally the note of the defendant. It is laid, and must 
be pleaded according to its legal operation. The case of Butler v. Mal- 
lissy, 1 Strange, 76, is most strictly in point. 

The second objection is, "That this is laid as an absolute note, with- 
out mentioning the two conditions, — 1b they shall be able, or If Hen- 
shaw shall leave either of them sufficient to pay it. Answer. — The note 
which contains these two conditions will sufficiently support the declara- 
r*qT '>°°- ^^ support of this the *oase of Roberts v. Harnage, 2 Salk. 
L J 659, and the case of Butler v. Mallissy, 1 Strange, 76, formerly 
mentioned; are in point. 

Mr. North for the defendant was about to speak, but 

Lord Mansfield stopped him, and said, " I fancy you will hardly 
argue this," meaning that it was sufficiently clear on defendant's side of 
the question. 

Mr. North then observed, This was an action "brought by an indorsee, 
and is under very particular circumstances. I agree that a note in the 
name of two and importing to be made by two persons, may be actually 
signed by one only, and will be good; also, that a note may be declared 
upon according to its legal operation. 

As to the rest, if the Court is clear I will not trouble them. 

Lord Mansfield — ^I am very clear. This note was payable upon a 
contingency, but it is not an absolute note. What would it signify, to 
have put in all these contingencies, if the party was absolutely and at all 
events bound to pay it upon the death of George Henshaw? Most mani- 
festly it was not intended that he should be bound to pay it upon George 
Henshaw's death at all events. Therefore this is not a negotiable note : 
for a note payable upon an uncertain contingency is not a negotiable 
note. 

Mr. Justice Denison. — A note payable eventually upon an uncertain 
contingency can never be a negotiable note. And if it had been so, yet 
there ought to have been an averment "that George Henshaw did leave 



BILLS or EXOHANQE. 13 

one of them sufficient to pay it;" or "that th« defendant was otherwise 
able to pay it." And indeed this shows plainly that it is not a negotiable 
note within the meaning of the Act of Parliament, which means and 
intends an absolute note payable at all events. And I think, too, that it 
is a variance in the declaration from the note itself, for want of setting 
out these conditions. It ought to have been set out as it really was. 
But indeed one of these points depends upon the other ; and I think this 
note is only eventually and conditionally payable, and hj no means abso- 
lutely and at all events. 

*Mr. Justice Foster concurred, both as to the variance, and r »j^ -■ 
also that it was not a negotiable note, as being payable eventually L J 
and not absolutely. 

Per Cw. Judgment for the defendant as upon a nonsuit. 



II.— CARLOS v. FANCOUET. 

Jan. 31, 1794.— B. 5 T, E. 482. 

This was an action upon promises, and was brought in the Court of 
Common Pleas. The first count of the declaration alleged that the de- 
fendant made and signed a promissory note, by which he promised to 
pay to the plaintiflF's wife the sum of j610, "out of his the said defend- 
ant's money that should arise from his reversion of £43 when sold," and 
that the said reversion of the said £4:3 was sold before the suing forth of 
the original writ, &e. The declaration contained other counts, for work 
and labour, money paid, &c., &c. 

The defendant suffered judgment to go by default; and a general 
judgment was entered upon the whole declaration. A writ of error was 
then brought; and the plaintiff in error assigned for error, that there 
was a general judgment on all the counts in the declaration, the first of 
which was founded on a supposed promissory note, as a note within the 
Statute made concerning promissory notes, whereas it was not a note 
within the Statute, but a contingent note; and on which, as stated in 
the declaration, it appeared to be uncertain whether or not the money 
therein specified would ever become payable, and was therefore void in 
law ; and that it did not appear that the note was given for value re- 
ceived, or for any valuable or legal consideration whatever, &e. 

Morgan for the plaintiff in error. — The note declared upon is void, 
and not negotiable within the Statute 3 and 4 Anne, c. 9, because it is 
payable only on a contingency, on an uncertain event which may never 
happen,and out of an uncertain *fund which may not be suflScient n »c-| 
to answer it ; and being void in its creation, it cannot be made L J 
good by the subsequent event of the sale of the reversion of the £43. 
That a bill of exchange, payable on a contingency, is not good, has been 
determined in a variety of cases ; particularly in Dawkes v. The Earl of 
Deloraine, and in Kingston v. Long, M. 25, G. 3, B. E. Then if a bill 
of exchange payable on a contingency be not good, neither can a promis- 
sory note, which is put on the same footing with bills of exchange by 

April, 1854.— 2 



14 ROSS ON COMMERCIAL LAW. 

the 3,d and 4th Anne, c. 9. But this does not rest merely on the analogy, 
to bills of exchange, the same point having been decided with regard to 
promissory notes; Pearson y. Garret, Skin. 398, and Comb. 227; 
B.eardesley v. Baldwin, 2 Strange, 1151; Roberts v. Peake, 1 Burr. 
325 ; and the saiiie doctrine was laid down by Lord Mansfield in Goss v. 
Nelson, 1 Burr. 227, where the objection that the note was contingent, 
was overruled. His lordship there said, — " A contingent note, where 
it is uncertain whether the money shall ever become payable at all or 
not, is another case : such a note is not within the statute." 

Wood, contra It is admitted that a bill payable out of a particular 

fund, is not a bill within the custom of merchants, but promissory notes 
are not governed by all the rules which apply to bills of exchange, their 
origin being different. The latter depend on the custom of merchants, 
which does not extend to contingent bills ; the former on the statute of 
Anne, which makes promissory notes in general assignable, without dis- 
tinguishing between those which are payable at all events, and such as 
are only payable on a contingency. The cases cited on bills of exchange 
are not therefore applicable to this case. In Andrews v. Franklin, 1 
Strange, 24, where an action was brought upon a promissory note, pay- 
able two months after such a ship was paid off, and the plaintiff declared 
upon it as a note within the statute, and where this very objection was 
taken that it was not negotiable, because it was payable only on a con- 
tingency which might never happen, the court decided that it was nego- 
tiable as a promissory note. In Dawkes v. Lord Deloraine, 2 Bl. Rep. 
784, the court recognised the case of Andrews v. Franklin, and dis- 
P ju„ -. tinguished ^between the case of a bill of exchange and a promis- 
L J sory note ; they said, " that was a promissory note, and not a bill 
of exchange ; and a note may be certainly payable on a future event." 
In Pearson v. Garret, the note was declared on as " within the custom 
of merchants," and therefore bad; besides which, that case happened 
before the statute of Anne. But even if the note in this case were not 
a good one within the statute of Anne, the words in the declaration "by 
force «f the statute," &c., might be rejected; and as this note had not 
been negotiated, at least as between these parties; the action might be, 
sustained. 

Lord Kenton, C. J — The question in this case is not, Whether the 
plaintiff in error, who may have promised for a valuable consideration to 
pay to the defendant a certain sum of money on an event, which has 
since happened, is or is not bound to perform that promise ? If this 
promise were made on a consideration, there is no doubt but that an 
action might be maintained on it, as on a special agreement ; but the 
question now before the court is. Whether or not the note set forth upon 
the record can be declared on as a negotiable security under the statute 
3 and 4 Anne, c. 9 ? The object of that act was to put promissory notes 
on the same footing with bills of exchange in every respect. It would 
perplex the commercial transactions of mankind if paper securities of 
this kind were issued out into the world encumbered with conditions and 
contingencies, and if the persons to whom they were offered in negotia- 
tion were obliged to inquire when these uncertain events would probably 



BILLSOI'KXCHANOE. 15 

\>e reduced to a certainty. It has been admitted, in the argument, that 
if thii^ were a bill of exchange the declaration could not be supported : 
many cases indeed were cited by the counsel on the other side to prove 
that position, to which may be added another in Lord Kaymond, where 
it was decided that a bill, which was not payable at all events, could not 
be considered as a bill of exchange : and this admission by the counsel 
for the defendant in error is decisive of this case ; for there is no differ- 
ence in this respect between promissory notes and bills of exchange ; 
they both stand in pari ratione. If we were to render this point in the 
least doubtful, we should *shake the foundation of that which r ^,7 -. 
has been considered as clear law ever since the time of Lord L -• 
Holt. I am therefore clearly of opinion that this note cannot be declared 
upon as a negotiable instrument ; at the same time I have no doubt but 
that an action might be framed on it as on a special agreement. The 
justice of the case is certainly with the defendant in error : but we must 
not transgress the legal limits of the law, in order to decide according to 
conscience and equity. We need have no reluctance in reversing the 
judgment of the Common Pleas, because as this was a judgment by 
default, that court had no opportunity of exercising their judgment upon 
the question. 

AsHHURST, J. — ^Before the statute of Anne promissory notes were 
not assignable as choses in action, nor could actions have been brought 
on them, because the considerations do not appear on them; and it was 
to answer the purposes of commerce that those notes were put by the 
statute on the same footing with bills of exchange. Then they cannot 
rest on a better footing than bills of exchange, but must stand or fall on 
the same rules by which bills of exchange are governed. Certainty is 
a great object in commercial instruments; and unless they carry their 
own validity on the face of them, they are ndt negotiable. On that 
ground bills of exchange, which are only payable on a contingency, are 
not negotiable, because it does not appear on the face of them whether 
or not they will ever be paid. The same rule then that governs bills of 
exchange in this respect must also govern promissory notes. And there- 
fore, though this might have been declared on as a special agreement, 
stating the consideration for the promise, and the sale of the reversion 
of £43, yet this action cannot be maintained. This does not come 
within the custom of merchants respecting bills of exchange, nor is it a 
negotiable instrument within the statute of Anne, because as a bill of 
exchange it would not be good. 

Grose, J The plaintiff below could only declare either on this in- 
strument, as a note under the statute of Anne, or on the special contract 
that existed between the parties. He has declared on the former : but 
this is not a negotiable '''instrument, because it is not payable at >- :|co -1 
all events. It has been said, however, that there is a difference •- ■■ 
in this respect between promissory notes and bills of exchange : but no 
decision has been cited to warrant such a distinction; and without such 
an authority I think that we ought not to establish it ; for the words of 
the statute of Anne are, "Therefore to the intent to encourage trade 
and commerce, which will be much advanced if such notes shall have 



16 BOSS ON OOMMEBOIAL LAW. 

the same effect as inland bills of exchange, and shall be negotiated in 
like manner," &o. It clearly appears therefore to have been the inten- 
tion of the legislature to put promissory notes on the same foundation 
as bills of exchange. Now if this had been a bill of exchange, the 
declaration drawn on it as on a bill within the custom of merchants 
would have been bad, because the money was only to be paid on a con- 
tingency. Then if the plaintiff below had declared on this as on a spe- 
cial contract, he should have shown not only that there was a considera- 
tion for the promise, but also that the reversion was sold for at least 
£10, whereas here it is merely averred that the reversion was sold, with- 
out saying for how much. In whatever way therefore this question is 
considered, I think the declaration cannot be supported. 

Judgment reversed. 



III. — BOLTON T. DUGDALE. 

April 18, 1833.— F. 4 B. & A. 619. 24 E. C. L. B. 

This was an action of assumpsit for money lent, brought by the ad- 
ministrator of the creditor against the executor of the debtor. At the 
trial the following instrument was given in evidence to prove the loan of 
the money by the intestate to the testator : — 

" Received and borrowed of Timothy Bolton, labourer, the sum of 
MBO, which I do hereby promise to pay with interest at the rate of 5 
per cent. I also promise to pay the demands of the sick club at Ha- 
worlh in the county of York, in part of interest, and the remaining 
r "Q T s'""'^ ^'i'^ interest to be paid on *demand to the said Timothy 
L J Bolton, his executors, administrators, or assigns. Witness my 
hand this 17th day of September, 1805. Abram Dugdale." 

The instrument bore a £1 agreement stamp, and on the back of it 
was a receipt for the penalty of £6, and ;£1 duty. Bolton, the intestate, 
lived at Blackburn in Lancashire, and was a member of a sick club at 
Haworth, near which place Ddgdale the testator lived. Dugdalfe had 
within six years paid money to the club on Bolton's account. For the 
defendant it was contended that the instrument was a promissory note 
and therefore could not be received in evidence, the stamp having been 
affixed after it was made ; to which point Green v. Davies, 4 B. & C. 
235, was cited. Mr. Justice Alderson thought the writihg was an 
agreement; and he directed a verdict for the plaintiff, giving leave to 
move to enter a nonsuit. 

Knowles now moved accordingly. — ^No specific form of words is 
necessary to constitute a promissory note. Here, if the document had 
ended with the first sentence, it would have nearly resembled that 
which was held to be a promissory note in Green v. Davies. Then was 
its character altered by the subsequent promise to pay the demands of 
the sick club in part of interest ? The mention of the club was only 
a description of the mode in which those payments were to be made: as 



BILLS OP EXCHANGE. 17 

if at the foot of the common promissory note there had been memoran- 
dum that the interest was to be paid into a particular bank. 

Paekb, J. — Could Dugdale have been obliged to pay the interest in 
any other way than to the sick club ? And it was uncertain what their 
demand would be. 

Knowles Ho was liable to pay on demand, and it is not clear that 

that demand might not have been made before anything was due to the 
club. The payments to be required by the club could not exceed five 
per cent, on the principal. 

Denman, C. J. — To a certain extent this instrument resembled a 
promissory note ; but it was, in fact, an agreement ingrafted on a note. 
The objection cannot prevail. 

LiTTLEDALE, J. — Concurred. r*lftn 

Fabk, J. — The amount of the sick club charges was uucer- I- -I 
tain ; so, therefore, was the sum to be paid to Dugdale ; the instrument 
as far as regarded this contingent demand, could not be a promissory 
note ; and the transaction was entire. 

PATrESON, J. — The instrument engages for the payment of " remain- 
ing stock and interest," at a time not fixed. It is something like the 
undertaking in Leeds v. Lancashire, 2 Camp. 205, which was held not 
to be a promissory note. 

Eule refused. 



IV.— VISCOUNT GAENOCK v. THE DUKE OP 
QUEENSBEERY. 

February 1721.-8. M. 1401. 

James Duke of Queensberry, deceased, did, in June 1708, draw a bill 
on David Earl of Glasgow, of the following tenor : — 

" My Lord, — Be pleased to advance to John Viscount of Garnock, 
upon the account, and for the use of Patrick Master of Garnock, his 
eldest son, ten shillings per diem, commencing from the first of June 
instant ; and that aye and while the said Patrick Master of Garnock be 
provided with a company in her Majesty's forces. This from, my lord, 
your humble servant, 

" QUEENSBEREY." 

On this title the said Patrick Viaeount «f Garnock pursued his Grace 
the Duke of Queensberry, as representing the late Duke his father, for 
the sum of 10s. per diem, since the first of June 1708, and in time 
coming, until he be provided with a company in the forces ; and dama. 
ges for non-performanoe. 

Pleaded for the Defender, — This is no proper bill, and thCTe- 
fore must fall, as wanting the writer's name and witnesses. It is not 
every writing that has a drawer, a person on whom it is drawn, and a 
creditor that can be reckoned to have the privileges of a bill. This will 
be plain, by reflecting, that the only reason who these privileges are 



18 ROSSONCOMMEKOiALLAW. 

P jjI 1 -, indulged to bills, proceeds *from this, that they are looked upon 
L J as bags of money, passing from hand to hand, as a necessary 
medium of trade. If then it appear from the deed, that it neither Js 
nor can be looked upon in this manner, it is not in the power of private 
parties to give it those privileges. A proper subject, namely, a sum of 
money to be paid at a certain time, is as essentially necessary to the 
nature of a bill, as a drawer, acceptor, or creditor. Now, by this writ, 
there never was any design to transfer money from hand to hand ; this 
could be no view in the transaction, but barely to grant a security. 
Besides, it is entirely gratuitous, without an onerous cause in money or 
merchandise, which of itself- is enough to defeat it, it being inconsistent 
with the nature of a bill to be gratuitous"; and, therefore, if this writ- 
ing be allowed to pass as a bill, then marriage-covenants, jointures to 
wives, aliments, in short, everything that can fall under an obligation, 
may be established by the form of a bill, which would confound all 
securities, and render ineffectual all our excellent regulations, that are 
designed to secure us against forgeries. 

It is true that from the favour of commerce, right to merchandise may 
be conveyed without all the solemnities of law ; but then, though con- 
ceived by way of bill or precept, they have not the privileges contained 
in the said acts of parliament, as was decided 16th December, 1713, 
Leslefy v, Bobertson, 19th February, 1715, Douglas v. Erskine. But 
however the ordinary solemnities are dispensed with on account that the 
matter is in re mercatoria, though not precisely for money, where pre- 
cepts concern the delivery of salt, meal, or other merchandise, to extend 
that to obligements for daily or yearly prestations, during one's life, or 
to an uncertain event, would be to overturn the foundations of our law 
anent bills. Neither is this ease so similar to that of a bill drawn for a 
certain sum of money, payable in different parcels ; which indeed is a 
proper subject in commerce, and only so many bills in one paper as there 
are terms of payment. But here, the precept being for a daily presta- 
tion, can no more be a medium of trade than a liferent right, or indeed 
any other security whatsoever that can be figured in imagination ; and 
therefore this improbative deed can never stand against the force of the 
T *12 1 ^°°^ ^°^ laudable *laws, made to prevent the ruin of families, 
L J by guarding against the artifices of forgers. 

The lords refused to sustain the bill. 



1. By the common law of England, no contract or debt is assignable ; our 
ancestors appearing in the times of simplicity to have apprehended from such 
transfer, much oppression and litigation. But mercantile experience has proved 
the assignment of debts to be indispensable, and bills of exchange to be the 
most convenient instruments for facilitating, securing, and authenticating the 
transfer. They have, therefore, come into universal use among all civflised 
nations, and the common law has recognised them as part of the law merchant. 
— Byles on Bills, p. 2. 

2. The common law again distinguishes contracts into two kinds : contracts 
under seal or by deed; and contracts not under seal or simple contracts. -Con- 



BILLSOJEXOHANQE. 19 

tracts nnder seal are valid without consideration ; simple contracts are void 
unless consideration be averred in pleading, and establisned in evidence. 

All the contracts arising on a bill of exchange are simple contracts, but they 
differ from other simple contracts in these two particulars : first, that they are 
assignable; secondly, that consideration will be presumed till the contrary 
appear. 

The legal effect of drawing a bill, payable to a third person is a conditional con- 
tract by the drawer to pay the payee, his order or the bearer, as the case may be, 
if the acceptor do not. The effect of accepting a bill or making a note is an abso- 
lute contract, on the part of the acceptor oi the one or maker of the other, to pay the 
payee, or order or bearer, as the instrument may require. The effect of indors- 
ing is a conditional contract, on the part of the indorser to pay the immediate 
or any succeeding indorsee or bearer, in case of the acceptors or maker's de- 
fault. — ^Byles on Bills, pp. 2, 3. 

3. No precise form of words is necessary to constitute a bill or *note, r s-i q -i 

frovided the legal requisites essential to such an instrument are satisfied. ^ ' 
n Morris v. Lee, 1 Strange, 629, the plaintiff declared that the defendant made 
a promissory note under his hand, whereby he promised to be accountabh to the 
plaintiff or order for £100 value received. After verdict for the plaintiff, it was 
moved in arrest of judgment, that the note was not within the statute, that the 
distinction had always held between negotiable and accountable notes, that no 
note was negotiable that was not for payment of money absolutely, but that in 
the present casethfe defendant might discharge himself by payment of the plain- 
tiff's debts. The Court observed, "There are no precise words requisite to 
make a promissory note. It is enough if it may be brought within the intention 
of the Act. This is for value received, and he makes himself accountable to the 
order. A fourth or fifth indorser can settle no account with him, therefore we 
must take the word accountable as much as if it had been jiaj/, and the plaintiff 
must have judgment." Lord Raymond also reports the case of Morris v. Lee, 
and observes, "^at per curiam, — There are no precise words necessary to be 
used in a promissory note or bill of exchange : Rast. 338. Deliver such a sum of 
money, makes a good bill of exchange. But if this promissory note is within 
the intent of the Act it is sufficient, though it does not follow the very words of 
the Act. Now by the receiving the value, the defendant became a debtor; and 
when he promises to be accountable for it to A., it is the same thing as a promise 
to pay to A. And it is the stronger, because it is to be accountable to A. or 
order, which is the proper expression used in such notes, and mentioned in the 
Act of Parliament, where it is intended the note should be indorsable or negoti- 
able. But it would be an odd construction, to expound the word accountable, to 
give an account, when there may be several indorsees. But if this note had 
been value received upon account, it might have had a different consideration. 
Sed quaere. Powys, Justice, relied much upon the verdict in this case ; but 
Portescue, Justice, Reynolds, Justice, and Raymond, Chief Justice, were of 
opinion, that if ihe note was not within the Act, the verdict could not help it ; 
but the note would be within the Act or not upon the words of the note. Judg- 
ment for the plaintiff." — 2 Raymond, 1397. 

4. It may be doubted whether the Court did not go too far in the case of 
Morris v. Lee, in lolding the expression " to be accountable for," equivalent to 
the expression " to pay." The case Home v. Redfearn, 4 Bingham, 433, May 
4, 1838, was an action for money lent. The following document was offered in 
evidence, " Sir, — I have received the sum of £20, which I have borrowed of you, 
and I have to be accountable for the said sum with legal interest." The docu- 
ment was stamped jome *years after its date with an agreement stamp, r ^,, -i 
The question raised was. Whether the document was admissible in evi- L J 
dence under an agreunent stamp ? The defendant contended that it was a pro- 
missory note, that it ought to have been stamped as such at the time it was 
written, and that the Commissioners of Stamps had no power to stamp it after- 
wards. The Court deeded in favour of the plaintiff. Bosanquet, J., observed, 
— "I consider this an agreement and not a promissory note. The fair and rea- 
sonable interpretation of the words, ' I have to be accountable,' is, that the party 



20 ROSS ON COMMERCIAL LAW. 

will give credit in account, and pay the balance. That is a special agjeeinent 
and not a promissory note." 

5. The case of Andrews v. Franklin, 1 Strange, 24, was an action upon a pro- 
missory note to pay within two months after a particular ship was paid off. The 
defendant insisted that the note was not negotiable, it being upon a contingency 
which might never happen. The Court however observed, " The paying off of 
the ship is a thing of a public nature, and this is negotiable as a promissory 
note." The case of Evans v. Underwood, 1 Wilson, 262, was an action upon a 
promissory note by the indorsee against the drawee. The note was in these 
terms: — "I promise to pay to George Pratt or order eight pounds, upon the 
receipt of his the said George Pratrs wages due from His Majesty's ship the 
Suffolk, it being in full for his wages and prize money, and short allowance 
money for the said ship." It was averred that the defendant recovered the 
wages. Upon non assumpsit the jury gave a verdict for the plaintiff, and it was 
afterwards moved in arrest of judgment, that the note was not negotiable within 
the statute. The case of Andrews v. Franklin was relied on by the plaintifit 
but it was denied by the defendant that that case had been ever determined. 
Chief Justice Lee observed, " The case of Andrews v. Franklin is very like the 
present. We will look into that case and see whether it was determined." The 
Keporter adds, "The Court inclined to give judgment for the plaiiitiff, and 
after looking into the case cited, did so, ut audivi." It may however be doubted 
whether these two cases would now be followed as precedents. 

6. In Martin v. Chauntry, 2 Strange, 1271, it was held that a note to deliver 
up horses and a wharf, and pay money at a particular day, could not be counted 
as a note within the Statute. In Smith v. Boheme, 2 Raymond, 1362, the note 
was, "We promise to pay to Caleb Smith or order upon demand, £71 12s, lOd., 
for value received, or surrender the body of Samuel Boheme for tiie action 
brought by the said Master Smith against him." It was adjudged "that this 
was no negotiable note within the Act of Parliament, and that an action could 
not be maintained on that note within that law because the money was not abso- 
r *15 1 ^"^^■'y payable, *but it depended upon a contingency whether he would 
L ■' surrender S. B. to prison or not." 

7. In Smiti V. Nightingale, 2 Starkie, 375, the instrument was in thes.e terms : 
— " I promise to pay to James Bastling, my head carter, the sum of ^666, with 
lawful interest for the same, three months after date, and also all other sums 
which may be due to him." It was objected on the part of the defendant that 
this instrument could not be considered as a promissory note, since it was not 
made for the payment of any certain sum, and that it could not be given in 
evidence under the count upon an account stated, since it was aa agreement 
and for a larger sum than £20, and ought to be stamped. Lord EUenborough 
was of opinion that the instrument was too indefinite to be considered as a pro- 
missory note ; that it contained a promise to pay interest for a sun not specified, 
and no otherwise ascertained than by reference to the defenda^it's books; and 
that since the whole constituted one entire promise, it could not be divided into 
parts. He also held, that since the instrument contained an Agreement to pay 
the money, it could not be received in evidence as an acknoWedgment without 
a stamp. j 

8. In Leeds v. Lancashire, 2 Campbell, 205, referred to in JBolton v. Dugdale 
there was an indorsement on a promissory note by three persons written at the 
time of signing it, and stating that that writ was taken by thfe payee as a secu- 
rity for all balances to the amount of the sum specified in me note, which one 
of the three parties to the note might owe to the payee: that the note should be 
in force Six months, and that no money should be liable to Je called for sooner 
in any case. The plaintiffs declared as payees of a promissory note. The first 
count stated the note as payable on request, the second ai payable six months 
after date. It was objected on the part of the defendan^that the note was in 
reality an agreement, and ought to have been stampod, and declared upon 
accordingly ._ Lord EUenborough observed, "As betVeen these parties the 
instrument in question is only an agreement, and not/a promissory note. In 
the hands of a bona fide holder, who received it as a ffomiasory note, it might 
possibly be considered as such ; but the present plaintiffs can only treat it al a 
guarantee for Marriott to the amount of^£200. As/o them, the indorsement 



BILLS 07 EXCHANOE. 21 

mngt be incorporated with the body of the note. It is clear, therefore, that they 
cannot maintain an action upon it without an agreement stamp." 

9. In Williamson v. Bennett, 2 Campbell, 417, the instrument produced was 
in these terms : " Borrowed and received of J. and J. Williamson (the plaintiffB) 
the sum of £200, in three drafts by W. and B. Williamson, dated as under, pay- 
able to us W. Bennett and S. Mitchell on J. and J. Williamson, which we pro- 
mise to pay unto the said J. and J. Williamson with interest, as *witness r »i /. t 
thia26thdayof August, 1802. L ^-oJ 

"Aug. 26, 1 Draft at 2 months, £120 

" Do, . 30 

" Do. . 50 

£200 
W. Bennett, 
S. Mitchell." 
It was objected on the part of the defendant that this instrument was an agree- 
ment and not a promissory note, and that it could not be received in evidence 
without an agreement stamp. Lord EUenborough observed, — " I think that 
this is a special agreement, and not a promissory note. There can be no doubt 
that the money was not payable immediately, and that it was not to be paid at 
all unless the drafts were honoured. The tmnsaction on the face of the instru- 
ment is evidently this : the plaintiffs were to advance money to the defendants, 
for which this was to be a security, binding on the defendants after the money 
had been received. The defendants do not absolutely promise to pay £200, but 
the £200 they were about to borrow. All the ambiguity would be removed by 
reading ' which we promise to jjay,' ' which we promise to re-pay! I cannot 
admit the instrument as a promissory note." 

10. In the law of Scotland, in the case of Leslie v. Robertson, December 16, 
1713, the court found, " That salt bills, meal bills, or bills for the like fungibles, 
have not the privilege of bills of exchange for money ; without prejudice to their 
being s'lstained as probative in re mercatoria, without writer s name and wit- 
nesses and the ordinary solemnities required in other writs, because bills for 
delivery of salt, or the like fungibles, are neither liquid in the value, nor bear 
the word^ay, as bills of exchange for liquid sums. A similar judgment was 
pronounced in the case of Douglas v. Brskine, February 18, 1715. The defen- 
der there contended that a salt bill had not the privilege of a money bill which 
passes de manu in manum, but was liable to all exceptions s.% other debts, and 
that an indorsee to such bill had merely the rights of an assignee. The reason 
of the difference between bills of exchange and bills for fungibles, it was con- 
tended, was, that the former were in place of money, and were contrived to save 
the trouble of portage, and must therefore have a course as free as money had; 
but that salt bills or the like could not pass in that manner, nor was it usefdl 
for commerce that they should, and therefore had not the privilege of bills of 
exchange, but were only to be considered as assignations. The court found, 
that the indorser was only to be considered as a common assignee. 

13. The case of Campbell v. Campbell, 1793, was the case of a bill payable 
only on a certain evpnt. The bill was objected to on this ground, and the court 
sustained the objection. Lord Justice-Clerk Macqueen observed, — "Bills are 
indispensably *nece8sary for the purposes of commerce, but they are not r ^j,-, ^ -i 
to be sported with. In transactions where bills are not absolutely neces- <- ^ 
sary they have no title to much favour, for they are of all documents of debt the 
most easily forged. The Act 1772, which introduced the sexennial prescription 
of bills, is in this view an excellent statute, but were we to give our support to 
bills where the time of payment is made to depend upon an uncertain event, 
these bills would not fall within the operation of that act. They might not be 
payable for forty years." Lord Bskgrove observed, — " The court has hesitated 
to support a bill where the term of payment was remote, because it was a devi- 
ation from the proper nature of a bill, but the present case is ten times worse. 
Thirty or forty years may elapse before the existence of the condition on which 
the bill depends." — Bell's Cases, p. 111. 

14. The Scots Statute, 1681, c. 20, relating to foreign bills of exchange, is in 



22 EOSSONOOMMERCIAIiIiAW. 

these terms : — " Our Soveraigne Lord, considering how necessary it is for the 
flourishing of trade, that bills or letters of exchange be duely payed and have 
ready execution, conform to the custome of other parts, doeth therefore, 
with advice and consent of his Estates of Parliament, Statute and Okdain, 
that in case of any forraign bill of exchange, from or to this realm duely pro- 
^«sted for not acceptance, or for notnayment, the said protest having the wU ol 




tures, at the instance of the person to whom the same is made payable, or his 
order, either against the drawer or the indorser, in case of an protest for non-ac- 
ceptance, or against the acceptor, in case of a protest for non-payment, to the 
effect it may have the authority of the Judges thereof, interponed thereto, that 
letters of horning upon a simple charge of six dayes, and executorials necessary 
may pass thereupon, for the whole sums contained in the bill, as well exchange 
as principal, in forme as effeirs, sicklike, and in the same manner as upon regis- 
trat bonds, or decreets of registration, proceeding upon consent of parties. 
Providing alwayes. That if the saids protests be not duly registrat within six 
monthes, in manner above provided, then and in that ease, the saids bills and 
protests are not to have summar execution, but only to be pursued by way of 
-ordinary action, as accords. Ahd paetheb. It is hereby statute and enacted, 
that the sums contained in all bills of exchange, bear annual-rent in case of 
not acceptance from the date thereof, and in the case of acceptance and not 
payment from the day of their falling due, ay and while the payment thereof. 
And pabther. His Majesty, with advice aforesaid, hereby declares, that not- 
■r*1S1 ■''withstanding of the foresaids summar *execntion provided to follow 
L J upon bills of exchange, for the sums therein contained in manner above 
■specified; yetitshallbeleasomto the party charger to pursue for the exchange, 
if not contained in- the saids bills, with re-exchange, damage, interest, and 
all expenses before the ordinary Judge, or in case of suspension, to eek the 
same to the charge at the discussing of the said suspension, to the effect, that 
the same may be liquidat, and decreet given therefore, either ag"ainst the party 
•principal, or against him and his cautioners, as accords." 
: 16. The Scots Statute 1669, c. 36, is entituled " Act anent Inland Bills and 
Precepts," and is in these terms, — " Our Sovereign Lord, with advice and con- 
sent of the Estates of Parliament, statutes, enacts, and declares, that the same 
execution shall bfe competent, and proceed upon inland bills or precepts, as is 
provided to pass upon foreign bills of exchange, by the twentieth Act of the 
third Parliament King Charles Second, halden in anno 1681 : Which Act is 
hereby extended to inland bills and precepts in all points." 



A BILL OR NOTE MAT BE MADE PAYABLE ON AN EVENT WHICH 
IS CERTAIN TO HAPPEN, ALTHOUGH THE TIME OF HAPPENING MAT 
BE UNCERTAIN. 

' I. — COLEHAN v. COOkE. 

Feb. 10, 1743.— B. "Willis, R. 393. 

This was an action by an indorsee on two promissory notes granted 
by the defendant. By the one note the defendant promised to pay 
to Henry Delany, or order one hundred and fifty guineas, ten days after 
the death of his father, John Cooke, for value received. By the second 
note he promised to pay to the same party or order, six weeeks after the 
.death of his father, fifty guineas for value received. Both notes were 



'l\ 



BILLS OP EXCHANGE. 23 

duly indorsed by Delany to the plaintiff after the death of defendant's 
father. 

A verdict was returned for the plaintiff on both notes, but a motion 
was afterwards made for the defendant in arrest of judgment. The fol- 
lowing opinion of the Court was delivered by 

Lord CLief Justice Willis. — Motion in arrest of judg- r:)cin-i 
ment. *The first count is on a promissory note dated 27th L J 
May, 1732, whereby the defendant promised to pay to Henry Delany or 
order 150 guineas, ten days after the death of his father John Cooke 
for value received j which note, after the death of the father, (which is 
said to be the 2d of April 1741,) was duly indorsed by Delany to the 
plaintiff. The second count is on a promissory note dated the 15th of 
July 1732, whereby the defendant promised to pay to Henry Delany or 
order, six weeks after the death of his father, 50 guineas for value 
received; the like indorsement laid after the death of the father as 
before. The third count is for money had and received, &c., £250 ; 
but this is out of the case. The damage is laid at ^300 and a general 
verdict for the plaintiff on both notes. 

It was insisted on for the defendant in arrest of judgment, that these 
notes are not within the Statute 3 and 4 Anne, c. 9, and if not they are 
not indorsable, or assignable, and c^onsequently that the plaintiff who 
brings this action as indorsee cannot recover at law. To show that these 
notes are not within the Statute a great many things were said on the 
arguing of the case, and a great many cases and authorities cited, both 
out of the common and civil law books. But I think that all the objec- 
tions that were made may be reduced to these two general positions : — 

1st, That the Act of Parliament only intended to put promissory 
notes on the same foot as bills of exchange; and that therefore if bills of 
exchange drawn in this manner would not be good, and consequently 
not assignable, it follows, that notes drawn in this manner are not made 
indorsable or assignable by the Statute. 

2dly, That the Act was made for the advancement of trade and com- 
merce, and consequently was intended to extend only to such notes as 
are in their nature negotiable, and that these notes are not so. 

Before I consider these objections, I will state the words of the 
Act of Parliament on which the question must depend, 3 and 4 
Anne, c. 9, entitled "An Act for giving like remedy on promissory 
notes as is now used on bills of exchange, and for the better payment of 
inland bills of exchange." " Whereas *it hath been held that r^oQI 
notes in writing signed by the party who makes the same, L J 
whereby such person promises to pay to any other person or his order 
any sum of money therein mentioned, are not assignable or indorsable 
over, within the custom of merchants, and that any person to whom 
such note shall be assigned, indorsed, or made payable, could not within 
the said custom maintain any action on such note against the person 
who first drew and signed the same : Therefore to the intent to encour- 
age trade and commerce, which will be much advanced if such notes 
shall have the same effect as inland bills of exchange and shall be nego- 
tiated in like manner, be it enacted, That all notes in writing, which 



24 ROSS ON COMMERCIAL LAW. 

shall after, &o., be made and signed by any person or persons, &c:, 
whereby such person or persons do or shall promise to pay to any other 
person or persons, &0., his, her, or their order, or unto the bearer, any 
sum of money mentioned in such note, shall be taken and construed by 
virtue thereof due and payable to any such person or persons, &o., to 
whom the same is made payable, and also every such note shall be 
assignable or indorsable over in the same manner as inland bills of 
exchange are or may be according to the custom of merchants ; and that 
the person or persons, &o., to 'whom the sum of money is made pay- 
able by such note, shall and may maintain an action for the same in such 
manner as he, she, or they may do upon any inland bill of exchange, 
&c. : and that the person or persons, &o., to whom such note is indorsed 
or assigned, or the money therein mentioned ordered to be paid by 
indorsement thereon, shall and may maintain his, her, or their action for 
such money either against the person or persons who signed such note, 
or against any of the persons who indorsed the same, in like manner as 
in case of inland bills of exchange." 

The title of the Act seems to refer to bills of exchange, and they are 
likewise referred to in the preamble, and the remedy is to be the same. 
But in the description of the notes which are to be made assignable 
there is no reference to bills of exchange ; but the words are very gene- 
ral, and I never understood that the plain words of an enacting clause 
axe to be restrained by the title or preamble of an act. It has indeed 
r #2T n ^^^^ often said, and I think very rightly, that if the words of 
L J *an Act of Parliament be doubtful, it may be proper to have 
recourse to the preamble to find out the meaning of the legislature ; but 
where the words of the enacting part are plain and express, I do not 
think thut they ought to be restrained by the preamble : for the pream- 
ble may only recite some particular mischiefs which have happened, but 
the enacting clause may not only be calculated to prevent those mis- 
chiefs, but others also of a like nature. Now the words of the enact- 
ing part of this Act are plain and clear, and very general; and in order 
to bring a note within the description of that clause, it is only necessary—.. 

First, That the note should be in writing ; 

Second, that it should be made and signed by the person promising 
to pay; 

And Third, That there be an express promise to pay to another or 
his order or bearer. But as to the time of payment the Act is silent, 
nor is there any particular form prescribed. 

And, therefore as the first objection, that if a bill of exchange had 
been, drawn in this manner it would not have been good ; supposing it 
to be true, I do not think that it follows that these promissory notes 
may not be within the general words of the Statute, if they answer all 
the descriptions therein contained. However, for argument's sake I 
will suppose that this consequence would hold ; but we do not think 
that a bill of exchange drawn in this manner would be bad. Upon this 
head it would be but misspending time to run over all the passages 
which have been cited out of the civil law books in relation to bills of 
exchange, because I put a question to the counsel which will, I think, 



BILLS OF EXOHANOB. 25 

determine this point, vhether there is any limited time mentioned in 
any of the books beyond which if bills of exchange are made payable 
fhey are not good, and it was agreed by the counsel that they could find 
DO such rule, and I am sure I can find none. But if a bill of exchange 
be made payable at never so distant a day, if it be a day that must 
come, it is no objection to the bill. There is but' one passage in the 
books wherein any motion to the contrary is so much as hinted at ; and 
that is in ScaccMus de commerciis, where it is said that it had been for- 
merly an objection against a bill of exchange, as contrary to the nature 
of it, that it was "payable at the end of seven months : but by ^ ^„„ , 
his making use of the word formerly, it is plain that in his L ^. 
opinion the law was then held to be otherwise. If therefore the distance 
of time would not have made a bill of exchange bad if drawn in this 
manner, since it is drawn at a time which must come, the only other 
objection that was made on this head was, that in all bills of exchange 
there must be a par pro pari, which there cannot be in this case, because 
the value cannot be ascertained. But I shall show plainly that the 
value may be ascertained when I come to the other objection, that these 
are not negotiable notes. 

Secondly, Having answered the objections against these notes con- 
sidering them on the same foot as bills of exchange, I come now to the 
second objection, arising from the words and intent of the Statute. 
And first, I think that they are plainly within the words. They are 
made in writing; they are signed by the person promising to pay, and 
there is an express promise to pay another or his order ; and as no 
time of payment is mentioned in the Statute, the distance of time is no 
objection within the words of the Act. 

Let us see, therefore, in the next place, whether any objection arises 
against them from the design and intent of the Act ; though I think it 
would be pretty hard to construe a note to be not within the intent of 
an Act when it is manifestly within the words of it, and the words of 
the Act are plain and express. When the words of an Act are doubtful 
and uncertain, it is proper to inquire what was the intent of the legis- 
lature : but it is very dangerous for Judges to launch out too far in 
searching into the intent of the legislature, when they have expressed 
themselves in plain and clear words. However, we think that these 
notes are within the intent as well as the words of the Act. " And to 
show that they are so, I will here take notice of all the cases which 
were cited to the contrary, and will show that they all stand on a dif- 
ferent foot, and are plainly distinguishable from the present. For they 
are all of them cases where either the fund out of which the payment 
was to be made is uncertain, or the time of payment is uncertain, and 
might or might not ever happen ; whereas in the present case there is 
no pretence that the fund is uncertain, and the *time of pay- ^ ^no i 
ment must come, because the father, after whose death they are L J 
made payable, must die one time or other. 

The case of Pearson v. Garrett, 4 Mod. 242, and Comb. 227, was 
thus: the defendant gave a note to pay 60 guineas when he married B., 
and judgment was given for the defendant, because it was uncertain 



26 ROSS ON COMMERCIAL LAW. 

whether he would ever marry her or not, so the time of payment might 
never come. In the case of Jocelyn v. Le Serre, P. 1 Gr- 1, B. R., 10 
Mod. 294 and 316, the bill was drawn on Jocelyn to pay so much every 
month out of his growing subsistence how long that would last no one 
could tell, or whether it would be sufficient for that purpose ; and there-, 
fore the bill was holden not to be good, because the fund was uncertain. 
In the case of Smith v. Boheme, M. 1 G-. 1, B. E., the promise in the 
note was to pay £70, or surrender a person therein named ; if therefore, 
he surrendered the person there was no promise to pay anything, and 
therefore the note was uncertain and not negotiable. In the case of 
Appleby v- Biddulph, P. 2 Geo. I., 8 Mod. 363, a promise to pay if 
his brother did not pay by such a time ; held not to be within the Stat- 
ute, because it was uncertain whether the drawer of the note would ever 
be liable to pay or not. In the case of Jenny v. Herle, 2 Eaymond, 
1361, Tr. 10 Geo. I., a promise to pay such a sum out of the income of 
the Devonshire mines ; held not a promise within the Statute, because 
it was uncertain whether the fund would be sufficient to pay it. So in 
the case of Barnsley t. Baldwin, P. 14 Geo. 1,1., B. R.,,2 Strange 
1151, the promise was, as in the case of Pearson v. Garrett, to pay 
such a sum on marriage; and held not to be within the Statute for the 
same reason. And as these notes are plainly not within the intent of 
the Statute, because not negotiable ab initio, so when the words them- 
selves come to be considered, they are not within the words of it, because 
the Statute only extends to such notes where there is an absolute pro- 
mise to pay, and not a promise depending on a contingency, and where 
the money at the time of the giving of the note becomes due and paya- 
ble by virtue thereof, (so are the words of the Statute,) and not where 
it becomes due and payable by virtue of a subsequent contingency 
which may perhaps never happen, and then the money will never 
r*94. n ^^''°™® payable at all. *And it can never be said that there is 
L J a promise to pay money, or that money becomes due and paya- 
ble by virtue of a note, when unless such subsequent contingency hap- 
pen the drawer of the note does not promise to pay anything at all. 

But the present notes, and those cases where such notes have been 
holden to be within the Statute, do not depend on any such contin- 
gency, but there is a certain promise to pay at the time of the giving of 
the notes, and the money by virtue thereof will certainly become due 
and payable one time or other, though it is uncertain when that time 
will come. The bills therefore of exchange commonly called billae nun- 
dinales, were always holden to be good, because, though these fairs 
were not always holden at a certain time, yet it was certain that they 
would be held. The case of Andrews v. Eranklyn, 1 Strange, 24, H. 
3 Geo. I., B. E., depends on the same reason ; for there the note was to 
pay such a sum two months after such a ship was paid off j and held 
good, because the ship would certainly be paid off one time or other. 
The case of Lewis v. Ord, T. 8 and 9 Geo. II., B. E., was exactly the 
like case, and determined on the same reason. As to the objection, 
that these are not negotiable notes, because the value of them cannot be 
ascertained, the argument is not founded on fact, because the value of a 



BILLS OF XXOHANQE. 27 

life when the age of a person is known is as well settled as can be ; 
and there are many printed books in which these calculations are made. 
But if it were otherwise, the life of a man may be insured, and by that 
the value will be ascertained. And the same answer will serve to the 
objection which I before mentioned against such bills of exchange. 

There was another objection taken, that the drawer might have died 
before his father, and then these notes would have been of no value ; 
but there is plainly nothing in this objection, for the same may be said 
of any note payable at a distant time, that the drawer may die worth 
nothing before the note becomes payable. 

We do not think that the averment of the death of the father before 
the indorsement makes any alteration, because we are of opinion that if 
the notes were not within the Statute ab initio, they shall not be made 
so by any subsequent contingency. *But for the reasons afore- r mnR -i 
said we are of opinion, (and so was the Lord Chief Baron Par- L -• 
ker,) that the plaintiff is entitled to his judgment ; and therefore the 
rule for arresting the judgment must be discharged. 

The judgment of the Court of Common Fleas was afterwards affirmed 
in the Court of King's Bench on a writ of error. 



II. — G0S8 V. NELSON. 

Feb. 5, 1757.— B. 1 Burr. 226. 

This was an action upon a promissory note brought by the payee. 
The note was made payable when the plaintiff should oome of age, and 
specifying the time when that should be, namely, the 17th of June, 
1750. 

Verdict was obtained by the plaintiff, but it was moved on the part of 
the defendant to arrest the judgment, on the ground that the note was 
not a good note within the Statute. 

Gould for the plaintiff. — The sum payable by the note is debitum in 
prcesenti, though solvendum in/uturo. In the case of Cooke v. Colehan, 
2 Strange, 1217, a note " to pay in six weeks after the defendant's 
father's death," was held to be a good note. 

Caldecot for the defendant. — The notes set forth in the declaration 
are not notes for the benefit of trade ; nor is the money made certainly 
payable. The note was given to the plaintiff thirteen years before the 
time when he was to come of age : and it was not at all certain that he 
would live to attain that age. In the case of Beardsley v. Baldwin, 2 
Strange, 1151, a note " to pay within so many days after the defendant 
should marry," was held not to be a negotiable note within the Statute. 
The case of Cooke v. Colehan, 2 Strange, 1217, was payable .six weeks 
after a death ; wWch was a certain event. In order to have the effect 
of a promissory note within this Statute, it ought to be a cash note, and 
payable at all events. No note *is negotiable which is not for ^ ^^„ _ 
the payment of money absolutely. 1 Strange, 629, Morris v. Lee. L " J 
That was a note promising " to be accountable to the plaintiff or order 



28 ROSS ON COMMEROIAI LAW. 

for £100 value received," and held good. But a " quaere tamen" ia 
added by Sir John Strange. All notes payable on contingencies are 
bad within this act; and this is a contingency, "whether he may arrive 
at the age of twenty-one or not." 

Lord Mansfield. — The note would have been clearly good if it had 
been made payable on the 12th of June, 1750 j (that is to say, on a day 
certain)) without mentioning the plaintiff's being then to come of age : 
and surely it is not the less certain for adding that circumstance. Lega- 
cies are of a different nature ; and they are determined by different rules. 
They are directions to the executor to pay ; and in legacies there is a 
known distinction between the time being annexed to the substance of 
the gift, or to the payment. If complete words of gift direct the exe- 
cutor to pay, the other words only fix the time of such payment; and 
then the legacy vests, and is transmissible, though the legatee should 
die before the day of payment; as a legacy given "to be paid at twenty- 
one." But if the time is annexed to the substance of the gift, as a 
legacy "if" or "when" he shall attain twenty-one,, it will not vest before 
that contingency happens. But here the words of engagement make the 
debt, and it is no direction to another person. The former part of the 
note is a promise to pay tlie money, and the rest is only fixing the par- 
ticular time when it is to be paid. It is enough if it be certainly and at 
all events payable at that time, whether he lives till then or dies in the 
interim. Therefore it is a good note within this remedial statute. In- 
deed, a contingent note, where it is uncertain " whether the money shall 
ever become payable at all or not," is another ease ; such a note is not 
within the statute. 

Mr. Justice Denison. — Here is no condition of uncertainty, but it is 
to be paid certainly and at all events; only the time of payment is post- 
poned. And the case of Cooke v. Colehan was the opinion of the whole 
Court. [He also cited Boraston's case, 3 Co. Rep. 19, which proves, 
r *27 1 * ^^^^^ ^^^ words refer *to what must necessarily happen, it 
L -1 is no contingency, but a remainder executed. V. Equity Cases 
Abridged, fol. 190, pi. 61, S. C] 

Mr. Justice Foster concurred A legacy may be given upon any 

terms. But upon a promissory note the time of payment is only for the 
benefit of the debtor. Here the time of payment is certainly fixed : 
and the particular day specified for payment of the money, being men- 
tioned to be the day on which the infant is to come of age, makes no 
difference from what it would have been if that circumstance had been 
omitted. 

And they all agreed that this was dehitvm, in prsesenti, though sofoen- 
dum in futuro. ' 

Per Gur. unanimously, Eule discharged : 
And the postea ordered to be delivered to the plain tiff. 



BILLS OP EXCHANGE. 29 



A BILL OP EXCHANGE MUST NOT BE MADE PAYABLE OUT OP A 
SPECIFIO FUND. 

DAWKES V. EABL DE LORANE. 

Trinity Term, ITTI.— E. 2 Bl. 782. 3 Wilsoa, 207. 

This was an action upon a bill of exchange by the payee and her 
husband against the drawer. The bill was as follows : — "Seven weeks 
after date, please to pay Miss Keid £S2, lis. out of W. Steward's 
money, as soon as you shall receive it, for your humble servant, 

"De Lorane." 

"To Timothy Brecknock, Esq." 

The defendant pleaded in bar that the plaintiffs ought not to have 
their account maintained against him, because the acceptor had never 
received any value of the said W. Steward's money mentioned, in the 
bill, or any part thereof, for the defendant, but that the same were still 
wholly unpaid. 

To this plea the plaintiffs demurred generally, and the defendant 
joined in demurrer. 

♦Sergeant Leigh for the Plaintiffs. — This is an action against j. ^„„ _ 
the drawer of a bill of exchange ; and it is alleged in the decla- L J 
ration that the bill was presented to Timothy Brecknock, the drawee, 
who accepted the same on the 8th day of January 1768 j and that after- 
wards on the first day of March 1768, the bill was presented to Mr. 
Brecknock for payment thereof, but he then refused to pay the same ; 
so that Lord De Lorane, the drawer, is liable to pay the same, by the 
usage and custom of merchants. 

I expect it will be objected, that this is not a bill of exchange but 
only an appointment, or an authority, or an order for Mr. Brecknock to 
pay the money out of W. Steward's money, as soon as he should receive 
it; and that the drawer. Lord De Lorane, never intended to make him- 
self chargeable by this bill, for that it it was not said to be for value 
received; but in answer to this, the case of Macleod v. Snee and others, 
in 2 Ld. Raym. 1481, and 2 Stra. 762, is like this case, where the 
plaintiff declared that A. B. drew a bill of exchange, dated 25th May, 
whereby he requested the defendant, one month after date, to pay to the 
plaintiff or order, £9, 10s., " as my quarterly half-pay to be due, from 
the 24th of June to the 27th of September next by advance ;" and the 
action was against the defendant upon his acceptance. It was objected, 
that this was no bill of exchange, because it is not to pay in all events ; 
and it was compared to the case of Joceline v. Leserre, Easter, 1 Geo. I. 
B. R. " Pray pay out of my growing subsistence, &c.," which was 
adjudged no bill of exchange, and which is cited in 2 Ld. Raym. 1362, 
in the case of Jenny v. Herle, which was upon a bill of exchange thus, 
— " Pray, pay to H. £1945 upon demand, out of the money in your 
hands^elonging to the proprietors of the Devonshire mines, being part 
of the consideration money for the manor of West Buckley :" which 
was adjudged no bill of exchange. But in answer to these cases, it 

April, 1854.— 3 



30 aOSS ON COMMERCIAL LAW. 

was urged on the other side (in the case of Maeleod v. Snee and others) 
that the bill, in that case, was a good bill of exchange, for that it was 
not payable upon a contingency, nor out of a particular fund, but was 
payable in all events, and payable to order, and was drawn upon the 
general credit of the drawer not out of the half-pay ; for it is payable 
r*9Q 1 ^^ ®°°° ^^ ^^^ quarter begins, for *the half-pay mentioned in the 
L ■' bill, which was not to be due till three months after ; and of 
that opinion was the whole Court, and the judgment of C. B. in Maeleod 
V. Snee, that the bill was a good bill of exchange, was affirmed. — [Nbta, 
The Eeporter did not understand how this case of Maeleod v. Snee, was 
in favour of the plaintiff in the case at bar, for it seems to him to be a 
case against the present plaintiff. Sed Quasre."] 

Serjeant Bavi/ for the Defendant. — This is not a bill of exchange, 
for three reasons : — 1st, It is not negotiable, not being made payable to 
order. 2dly, It is not drawn for value received; and Sdly, It is to pay 
out of a particular fund, viz., out of William Steward's money, as soon 
as you receive it, which is totally uncertain. 

1. According to the usage and custom of merchants, it is of the very 
essence of a bill of exchange, that it be made payable to some certain 
person or his order, or to the order of some certain person, for a bill of 
exchange may be, and very often is made payable to the order of the 
drawer himself, but this bill is not made payable to the order of any 
person, is not negotiable, so cannot be said to be a bill of exchange, 
drawn according to the usage and custom of merchants. See Mr. Cun- 
ningham's Treatise on Bills of Exchange, &c., and 2 Stra. 1211. 

2. According to the usage and custom of merchants, especially where 
you would charge the drawer, the bill must be drawn for value received, 
and to show this there are many cases in the books, 10 Mod. or Lucas's 
Reports, 294, 316, and in Mr. Cunningham's book many cases cited. 2 
Stra. 1212. 

3. This is a bill made payable out of a particular fund, which is held 
not to be a bill of exchange, according to the usage and custom of mer- 
chants. 2 Ld. Raym. 1361. Jenny v. Herle, 1 Stra. 591. S. C. 2 
Ld. Raym. 1563.. Haydock v. Lynch. See 4 Viner, 241. Pearse and 
Wheatley, reported in no other book. 

Sergeant Bavy further said, — That suppose this could be adjudged to 
be a good bill of exchange, yet the drawer is not liable upon the draw- 

r *^0 1 ''"^ °^ *'*® ^^^^' ^°^ ^^^^^ *''® acceptor has *failed in performing 
L -I his undertaking. Mr. Brecknock the acceptor has undertaken 
to pay the ^32, 17«. out of William Steward's money as soon as he 
shall receive it for Lord De Lorane, who has pleaded that Timothy 
Brecknock hath not at any time hitherto received any value of the said 
William Steward's money mentioned in the bill, or any part thereof for 
the Earl; but the same is wholly unpaid, which is admitted by the 
demurrer to be true, so that Brecknock hath not failed in performing 
his undertaking; and therefore the drawer is not yet chargeable, suppos- 
ing this to be a good bill of exchange, which the Sergeant by no means 
Admitted, but insisted it is not. 

Sergeant Leigh in reply, insisted, that the plea was ill, because, by 



BILLS OF EXOHANaE. 31 

not denying that Brecknock accepted the bill, the plea tacitly admits he 
did accept the same for payment, as alleged in the declaration. 

Lord Chief Justice Db Grey. — It is true that Brecknock did accept 
the bill to pay out of William Steward's money as soon as he should 
receive it ; but is this a general acceptance to pay in all events ? 

Sergeant Leigh answered, — The acceptance is a proof that Brecknock 
had received William Steward's money. If he had not received the 
money of Steward, why did he accept the bill ? And if this is only a 
partial, or conditional acceptance, it must be considered as no acceptance 

at all, and then the drawer is liable [He gave no answer to the two 

first objections, that the bill was not payable to order, nor was made for 
value received, that I heard, but only said, that his brother Davy had 
got all his cases out of Mr. Cunningham's book of bills of exchange, 
&o. Whereupon, Justice Gould said, that Mr. Cunningham's book was 
a very good book.] 

Lord Chief Justice De Grey. — The Court ought to be very careful 
how they lay down the law, in cases of bills of exchange, which so highly 
concern trade and commerce ; and therefore I shall take a few days for 
further consideration. 

*Gould, Justice. — I was present at the Old Bailey, when a ^ ^^^ -. 
person was indicted for forging a bill of exchange ; and it ap- L J 
peared by the bill supposed to be forged, that it was neither made paya- 
ble to order, or for value received. All the aldermen then present at 
the Old Bailey said, it was no bill of exchange; so the prisoner was 
acquitted. In a little book called Lex Mercatoria, there are various pre- 
cedents of bills of exchange, some with value received, and some with- 
out those words; but there is not one that is not made payable to order. 

After some days taken to consider this case, the Lord Chief Justice 
delivered the opinion of the whole Court for the defendant to the follow- 
ing effect : — 

Lord Chief Justice De Grey The pleadings in this cause, having 

before been fully stated, are well understood ; the question arises upon 
the first count in the declaration, viz., whether the bill therein set forth 
is a bill of exchange, made according to the custom and usage of mer- 
chants, so that an action will lie thereupon. 

It was objected at the bar for the defendant, that this is not a bill of 
exchange, made according to the usage and custom of merchants, for 
three reasons. — 1st, Because it is not made payable to order; 2ndly, 
That it is not drawn for value received ; and, lastly. That it is payable 
out of a supposed fund, at a future time, which was uncertain, and might 
or might not happen. 

We say nothing upon either of the two first objections, because our 
opinion, that this is no bill of exchange, is grounded upon the last objec- 
tion only. 

The instrument or writing, which constitutes a good bill of exchange, 
according to the law, usage, and custom of merchants, is not confined to 
any certain form or set of words, yet it must have some essential quali- 
ties without which it is no bill of exchange. It must carry with it a 
personal and certain credit given to the drawer, not confined to credit 



32 BOSS ON COMMEEOIAL LAW. 

upon any thing or fund; it is upon the credit of a person's hand, as on 
the hand of the drawer, the indorser, or the person who negotiates it. 
He to whom such bill is made payable or indorsed, takes it upon no 
r*qn-| particular event or contingency, except the failure of the •gene- 
L J ral personal credit of the persons drawing or negotiating the 
same. In the present case, the drawer did not make this writing or in- 
strument upon his own personal general credit, that in all events he 
would be liable in case Brecknock should not pay it out of William 
Steward's money; but both the drawer, and the person to whom paya- 
blej look only at the fund, and no personal credit is given to the defend- 
ant, the drawer. 

It was objected at the bar, that this bill is accepted by Brecknock 
generally, and in an unlimited manner; I answer, if the bill had been 
drawn accordingly, in a general and unlimited way, both the bill and the 
acceptance would have been good ; but the acceptance must mean, that 
Brecknock accepts it to pay out of Steward's money, not out of the 
drawer's money j and upon this record, it appears that Brecknock has 
not received any of Steward's money. I think it would be monstrous to 
say, that either the drawer or acceptor ought to pay this £32 17s. out 
of their own money. The case in Ld. Eaym. 1481, is not to pay out of 
a contingency, but in all events. And there is no case, that I can find, 
in any book, wherever an action would lie, as upon a bill of exchange, 
where the same was payable out of a future contingent fund. The case 
of Andrews and Eranklin, 1 Stra. 24, was a case on a promissory note, 
to pay within two months after such a ship is paid ofi^, and counts upon 
the statute. It was insisted that this is not negotiable, it being upon a 
contingency which may never happen ; but the Court held the paying off 
the ship is a thing of a public nature, and morally certain. Upon the 
whole, we are all of opinion, that judgment as to the first count in the 
declaration, must be entered for the defendant. 



1. The order must be to pay absolutely and at all events and payment must 
not depend upon a contingency; for as observed by Lord Kenyon, " It would 
perplex commercial transactions, if paper securities of this kind were issued into 
the world, incumbered with conditions and contingencies, and if the persons to 
whom they were offered in negotiation were obliged to inquire when these un- 
certain events would probably be reduced to a certainty." — Byles on Bills, p. 71. 
r *33 1 *^" '^^ °^^^ °^ Jenny v. Harle, 2 Raymond, 1361, was an action on a 
•- J bill of exchange drawn by the defendant upon John Pratt, by which he 
required him to pay to the plaintiff £1945 out of the moneys in his hands be- 
longing to the proprietors of the Devonshire Mines, being part of the considera- 
tion money for the purchase of the manor of West Buckland. Pratt having re- 
fused to accept the bill, the plaintiff sued the drawer as liable. To the count 
upon the bill of exchange the defendants demurred, and judgment was pro- 
nounced by the Court of Common Pleas in favour of the plaintiff. The defend- 
ant then brought a writ of error in the Court of King's Bench. Lord Raymond 
reports as follows :—" The judgment of the Common Pleas was reversed by 
Pratt, Chief-justice Portesque, and Raymond, Powys being absent: they being 
of opinion, this was not a bill of exchange, but a bare appointment to pay 
money out of the particular fund, with a view of having it paid out of which 
fund the defendants probably drew the bill, and never designed the bill should 



BILLS or EXCHANGE. 33 

fee payable at all events, but only out of the particular money mentioned in the 
bill, supposed to be in Pratt's hands. And it would be very mischievous to 
make such bills as these, which were but appointments, bills of exchange ; for, 
at that rate, if a tradesman applies to a gentleman for money for his bill, says 
the gentleman, I will direct my steward to pay you, and writes to him, — ' Pay to 
1. S. the money mentioned in this bill, out of my rents in your hands;' the 
steward has no rents in his hands; it can never be imagined the gentleman 
should be liable to be sued upon this, as upon a bill of exchange. And the case 
of Jocelin and Lascerre, Fort. 281, 10 Mod. 294, 316, was cited, where a bfll 
was drawn upon an agent of a regiment, ' Pray pay out of my growing subsist- 
ence, &c.,' and adjudged no bill of exchange. And though the counsel objected, 
the reason of that case was, because it depended upon a contingency; yet Jus- 
tice Portesque said, the reason was, because it was payable out of a particular 
fund : and if that was *the reason of it, it was the case in point. There r ^^, -i 
was also cited in the argument of this case, the case of Smith v. Boheme, L ^ J 
where the note was, ' I promise to pay J. S. so much money, or render the body 
of J. N. to prison before such a day; and it was adjudged to be no negotiable 
note within the Act of Parliament, and that an action could not be maintained 
on that note within that law ; because the money was not absolutely payable, 
but it depended on a contingency whether he womd surrender J. N. to prison or 
not. Judgment was reversed." 

3. Where a particular fund is mentioned by way of direction merely to the 
drawee, how he should reimburse himself, the instrument is a valid bill of ex- 
change ; for in that case the sum directed to be paid is payable absolutely, al- 
though the drawee should fail in reimbursing himself out of the fund specified. 
The case of M'Leod v. Snee, 1 Strange, V62, was an action against the acceptor 
of a bill of exchange, which directed the defendant to pay to the plaintiff, or 
order, £9 10*., "as my quarterly half-pay to be due from 24th June to 27th 
September next, by advance." It was objected that this was no bill of exchange, 
because it was not an order to pay at all events, but that it was left to the plea- 
sure of the person on whom it was drawn either to advance the money or not ; 
and it was compared to the case of Jocelin v. Lascerre, which was " to pay out 
of his growing subsistence," and to the case of Jenny v. Harle, which was " to 
pay out of a particular fund," in both of which cases the instruments were held 
to be no bills of exchange. The Court, however, observed, — " The quarterly 
half-pay is a certain fund, which the growing subsistence was not. The mention 
of the half-pay is only by way of direction how the acceptor was to reimburse 
himself, but the money is still to be advanced on the credit of theperson. The 
reason that it was held it was no bill of exchange on Jenny v. Harle, was, be- 

I cause it was no more than a private order to a man-servant." 

4. The case of Pierson v. Dunlop, 2 Cowper, 571, was an action by the owner 
of a ship against the acceptors of a bill drawn upon them by the freighter to 
the order of the captain of the ship. The bill was for £300, "payable 15 days 
after sight, to the order of William Nicol, on account of freight to be placed to 
account, at per advance." No objection was taken by the defendants to the 
validity of the bill, on the ground that it was payable out of a particular fund. 
In the case of Baubury v. Lisset, 2 Strange, 1211, the plaintiff declared upon 
the custom of merchants against the plaintiff, as acceptors of a bill of exchange, 
which was in these terms : — " Pray pay Mr. Richard Banbury, one month after 
date, £200 on account of freight of the Veale galley, Edward Champion, and 
this order shall be your sufficient discharge for the same." The defendants ob- 
jected to the *in8trument, that it was not a bill of exchange, in respect r ^„g -■ 
that it was not payable to order, so as to be negotiable, and that it was '- -' 
not said to be for value received, and that it was only an order upon a particular 
fund. Chief-Justice Lee ruled the instrument not to be a bill of exchange. 
"He said it was not in the power of the parties in what form they 
pleased to pass forth such a bill. It is to be agreeable to the lex mercatoria. 
The privilege arises to the convenience of trade, which is not consulted in this 
ease. The instrument is also bad upon the objection to the fund out of which 
it was to be paid." The difference between this case and that of Pierson v. 
Dunlop appears to be, that in the latter case the bill was drawn by the freighter 



34 ROSS ON COMMEROIAI. LAW. 

in payment of the freight, and the sum waa payable absolutely, whereas in the 
former case the bill was drawn by the owner on account of the freight. On the 
bill, however, being accepted by the freighter, it would rather seem that_ the 
sum thereby became payable absolutely, and that the mention of the freight 
merely indicated the consideration on account of which the bill was granted. 

6. In Scotland effect has been given to bills- which directed payment to be made 
out of a particular fund ; but this took place in one case where the fund was ad- 
mitted, and in another case where the pursuers were not a-vailing themselves of 
any of the peculiar privileges belonging to bills. The case of M'Gibbon v. The 
Managers of the "Woollen Manufactory at New Mills, July 14, ITIO, was an ac- 
tion upon a bill drawn by Major-General MacCartney, upon James Bamsay, then 
paymaster of the regiment of foot-guards, " ordering him to pay thirty-three 
pounds sterling out of his clearings of the month of July, August, September, 
October, November, and December, 1'798, in full of his and Hautboie's dues 
from the said regiment when received." On this bUl Mr. Ramsey wrote, " Ac- 
cepts when the clearings come to my hand."' The bill was intimated to the 
Commissioners of the Equivalent, 24th July, 1T07. The Managers of the man- 
ufactory at New Mills, who used arrestment in the hands of the Commissioners, 
upon a registered bond granted to them by the Major-General, claimed prefer- 
ence to M'Gibbon, in respect that their debt was unexceptionable, whereas the 
bill of exchange in his favour was payable out of a certain fund, when_ received 
by Mr. Ramsay. In support of their claim, they argued that the condition never 
being purified, the bill could not be held an effectual conveyance, although it 
might be a good instruction of the debt against the drawer, for the order to pay 
out of the clearance of such months was intended to point out the fund of the 
creditor's payment, and to free the acceptor from being liable to pay out of any 
other of the drawer's effects. For M'Gibbon it was pleaded, — The bill consti- 
tutes a pure aid simple debt against the drawer, although there be a condition 
r ^(.q/. -1 adjected to the *acceptor's payment. The bill being payable out of a 
'- -' particular fund, implied a virtual assignation thereto, for although the 
bill was made payable to Mr. Ramsay, yet the fund itself, though never received 
by him, must still be liable for the debt. The bill being intimated to the Com- 
missions for the Equivalent long before the competitor's arrestment, carried 
right to as much of the clearings in the hands of the Commissioners as would 
satisfy the bill, in the same manner as if the Major-General had assigned the 
clearings to M'Gibbon, and for his better payment, ordered Mr. Ramsay to pay 
the same when received, therefore M'Gibbon ought to be preferred. The Court 
preferred M'Gibbon. 

6. The ease of M'Dowal v. The Duke of Douglas, was an action by a creditor 
of the payee in a bill addressed by the Earl of Forfar to Captain Wardlaw, A 
agent for his regiment, in these terms: — "Pay to Thomas Agnew, or order, the "' 
sum of £111 sterling out of the first subsistence you receive for me, which shall 
become due eight months after date. Forfar." The bill was accepted by 
Captain Wardlaw, and the Earl fell in the battle of Sheriffmuir four months 
after the date of the bill. Captain Agnew lived ten years after, but never made 
any claim upon the Earl's representatives for the sum. The pursuer, a creditor 
of Captain Agnew, took up the claim as executor-creditor, and brought an action 
for payment against the Duke of Douglas. The defender pleaded, — ^Although 
bills of exchange, though not bearing value, are presumed to be for value, yet 
the writing founded on is not a document of that description. It is an order by ' 
the colonel 6f a regiment on the agent, not payable at a fixed time, or simply to 
pay, at whatever time, but to pay out of a certain fund, if it shall arise, eight 
months after date, implying a condition, that if no- fund shall ever arise either 
in consequence of death or othei-wise, nothing shall be due. Consequently al- 
though accepted, it could not be negociable, nor diligence proceed upon it in 
terms of the Act 1681 and 1696. Supposing the Eari had survived the eight 
months, and continued with the regiment until the sum in the order had been 
due to him for subsistence, still summary diligence could not have proceeded 
A proof must have been taken, that Captain Wardlaw had actually received so 
much, which would have required an ordinary action ; demonstration of itself 
that the writing was not a bill of exchange, but simply a conditional and event- 



BILLS or EXCHANGE. 35 

ual mandate, whicli not being value, value was not to be presumed. Pleaded 
for the pursuer, — Before one obtains a bill, by the ordinary course of business, 
he pays the value. Therefore, it is presumed, value is received from the creditor 
in the bill, unless it appear he was the servant of the drawer, receiving it upon 
his account. Captain Agnew was not the factor or servant of the Earl of For- 
far ; and the bill being payable to order, plainly implies that the money belonged 
*to the Captain, because he might have indorsed the biU. Bills payable r i/^nh -\ 
for behoof of the drawer ought not to bear to order, because the money ^ ■■ 
must be retained by the receiver for the drawer's use, when he pleases to call for 
it. The pretence that the bill was conditional, is frivolous. A fund is indeed 
pointed out for payment of the sum, but that becoming ineffectual, the drawer 
can no more, on that account, be liberated, than if no particular fund had been 
mentioned. A bill of the kind at issue is a money bill. Where the fund speci- 
fied fails, the debtor remains liable as if no fund had been mentioned. Utile 
per inutile non vitiatur. The Court found, that the order founded on, though it 
did not bear, yet presumed value. 

7. The case of Chiene v. Western Bank of Scotland, July 20, 1848, was a 
suspension at the instance of an acceptor, of a threatened charge for payment 
at the instance of an endorsee. The bill founded on was in these terms : — 
" Five months after date pay to me, or my order, at my house here, £1500 
sterling, value in account with Walter Frederick Campbell, Esq., of Islay." The 
bill was accepted by the suspender, and endorsed by the drawer to the charger. 
The first ground of suspension was, that the suspender was factor for Mr. Camp- 
bell of Islay, and that he had accepted only in his factorial capacity. The 
second ground was, that the bill was not absolutely payable, but payable out of 
a prospective fund. In support of this second ground it was argued, — 
It is established law that a bill of exchange or promissory-note must be 
absolute in its requirement and acceptance or promise to pay, to entitle it to 
the privilege of such documents. The bill in question, therefore, was not a valid 
bill or ground of debt against the complainer, as not being made payable at all 
events. The word^, " value in account," bore a different meaning from " value 
received." Had there been a value received, that would have been stated ; but 
nothing of .the kind was stated in the bill. Supposing the words, " value in 
account," to be understood as between Mr. Campbell and the complainer, it 
was evident that it was a prospective account with him as factor that was meant. 
The bill being drawn in these terms, negatived the idea that he could then have 
funds in his hands to discharge it ; and consequently, that it was out of a pros- 
pective fund which might come into his hands as Mr. Campbell's factor, that he 
was required, and by his acceptance became bound to pay. This was sufiBcient 
to void the document in question as a bill. The Lord Ordinary refused the 
Note of Suspension, in respect that the bill was discounted, and full value paid 
for the same ; that the suspender had unconditionally accepted thereof, and 
that -the onerous holders had no concern with the state of the suspender's ac- 
count with Mr. Campbell.' 

8. The suspender having reclaimed, *the Second Division of the Court r 4j.,g •, 
were equally divided, whether the document was a proper bill of ex- •- J 
change. The whole other Judges were then consulted, and the following opinion 
of Lord Ivory was concurred in by them ; — " I am of opinion that the Lord Or- 
dinary's interlocutor should be adhered to. . First, The acceptance in dispute is 
to be held, not as the acceptance of Mr. Campbell of Islay, subscribing and 
binding himself through the medium of his factor, but as the individual accep- 
tance of Mr. Chiene, and so attaching liability to him alone in his own proper 
person. Second, The words, ' value in account, with Walter Frederick Camp- 
bell, Esq., of Islay,' afford no ground for objecting to the instrument, as not 
constituting in law a proper bill of exchange. They merely point out the party 
on whose account Mr. Chiene acknowledged himself to hold, or to have received 
value; or, in the weakest sense, on whose account he bound himself g*"* acceptor, 
on the assumption aad representation that such value was admitted. While they 
do this, however, the acceptance and consequent obligation to pay are in themselves 
absolute. They are not made contingent on Mr. Chiene having, or not having, a 
particular fund. There is nothing uncertain or conditional on which payment 



36 EOSS ON COMMEROIAl LAW. 

is to be dependent. On the contrary, payment is to be made at all events ; the 
words in question merely indicating, as is very usual in such transactions, the 
particular account to the debit or credit respectively of which, according as the 
entry might fall to be made in the books of one or other of the parties, the pay- 
ment when thus made should be carried." 

9. On the case returning to the Second Division of the Court, Lord Justice- 
Clerk Hope and Lord Moncreiff stated that they were not satisfied that, accord- 
ing to the true principles of the Law Merchant the instrument was a bill of 
exchange. Lords Medwiu and Cockburn agreed with the consulted Judges- 
Lord Medwyn observed, — " If it could be maintained that this was not truly a 
bill, that on acceptance it was not payable at all events ; that it was dependent 
on some contingency, as, for instance, with regard to the fund out of which it 
was drawn, and out of which it was to be paid, then if that contingency failed, 
or the fund never existed, that it was in the hands of one who had given value 
for it, would be of no consequence. It was not an ordinary mercantile nego- 
tiable instrument. But I think it would be difficult to presume that it_ would be 
of such a nature when the object of the acceptor and drawer was to raise money 
upon it by discount immediately, and the Bank would not very likely give value 
to the amount of £1500 as for a bill, when it could not be looked on as such 
at all. Accordingly I did not partake in the doubt as to this being a bill and 
negotiable as such. I could not see that it bore to be a draft on any particular 
r jtqq -] fnnd out of which alone it was to be paid, and if this *never came into 
t- -I the acceptor's hands, that it was not to be payable at all. The bill isnot 
drawn on any fund, it is drawn directly on the suspender. If he be deceived 
in his acceptation as to having value when it became due, he must suffer the 
injury. He acted on a hope which he must have known might be disappointed, 
but for which the onerous holder is not responsible. The notice is merely be- 
tween the drawer and acceptor as to the value in account, to show that on pay- 
ment the suspender is to charge it in his account against Mr. Campbell of Islay. 
TV henever a bill in this or in any similar form is accepted, all inquiry is excluded 
as to how the account to which it is to be placed stands between the parties 
themselves. With this the onerous holder has nothing to do. Even in an ac- 
commodation bill, where the drawee never had, and may never afterwards have, 
a farthing of value in his hands belonging to the drawer, and even although it 
should be made out, ' value in account with C.,' his acceptance binds him to pay, 
and a third party has merely to inquire at the time into his solvency, and not 
whether there was value in his hands, or whether there was any account with C. 
to which he could place it on payment." 



A BILL OE NOTE MADE PAYABLE TO BEARER IS NEGOTIABLE, AND THE 
BEAEEE MAT MAINTAIN AN ACTION AGAINST THE DRAWEE. 

GRANT V. VAUGHAN. 

July 5, 1764.— E. 3 Burr. 1516. 1 BI. 485. 

The defendant drew a bill on London on Sir Charles Asgill and Co. 
for £70, payable to ship Fortune or bearer, which he gave to Mr. Bignell, 
the ship's husband, who lost it. It was found by a person unknown' 
who, on the 25th of October, paid it to the plaintiff, a grocer in Ports- 
mouth, for a parcel of teas, who gave the change, having first made in- 
quiry and found that the drawer was a responsible person. In the mean- 
time Vaughan directed Sir Charles Asgill to stop payment of the bill. 
Grant being refused payment, brought the present action against Vaughan j 



BILLS OF EXCHANGE. 37 

and inserted two counts in his declaration, one upon an inland bill of 
exchange, the other an indebitatus assumpsit for money had and received 
to his use. The cause was tried by a special jury of merchants, who 
found for the defendant. A motion was thereafter made for a new trial. 

•Lord Mansfield, who tried the cause, reported that he left - ^ , „ -. 
twoquestions to the jury, — 1. Whether the plaintiff came by the L J 
note, bona fide, for a valuable consideration ; as to which there was no 
dispute; 2. Whether, in the course of trade, such draughts, payable to 
bearer, were usually negotiated from hand to hand. No evidence was 
given to found this verdict upon, or to show a distinction between this 
and other bills of exchange. 

Morton, Eyer, and Wallace, for defendant, insisted that the plaintiff 
had been incautious in taking a draught drawn in London on a banker 
there, which, in the course of trade, ought to be tendered immediately 
for payment, at the distance of three days, in a distant country. That 
the only question was, upon which of two innocent men the loss must 
fall ; and then the incaution of the plaintiff will turn the balance against 
him. That this note is no bill of exchange, but merely an authority for 
the ship's husband to receive the money. That draughts payable to 
bearer are not intended to be negotiable. They differ from other bills, 
in that they are always tendered for payment, and not for acceptance ; 
no days of grace being allowed thereon : and that no contract arises be- 
tween the drawer and the casual bearer of such a bill, as there does in 
case of notes of hand or bankers' notes payable to bearer, for which a 
valuable consideration is always supposed to be given. And they relied 
on Horton and Coggs, 3 Lev. 299; Hodges and Steward, Salk. 125; 
Morris and Lee, Lord Eaym. 1397 ; that the draught must be payable to 
order to make it negotiable, and not to bearer only. So, too. Clerk and 
Martin, Lord Eaym. 758, and Nicholson and Sedgwick, Ibid. 180. 

Lord Mansfield, C. J. — I shall always be more happy in acknowledg- 
ing an error and correcting it, than in maintaining and persisting in it. 
I therefore, with great pleasure, take this opportunity to declare, that I 
am now convinced I mistook in the directions I gave to the jury; as the 
case came on by surprise, and I had no time to consider it fully. Upon 
general principles I was struck, and continue still of the same opinion, 
that since millions of property are vested in this kind of bills, it p ^, . , -, 
is unjust not to put them upon the same footing as common bills L J 
of exchange. When I left this matter to the jury, I did think, that I 
had only left a plain fact, as clear as whether there be such a thing as 
the Eank of England. But I ought not to have left it on the footing of 
the usage, it being a question of law only, whether such bills are or are 
not negotiable; and this question, perhaps, the jury understood to be left 
to them, whereas I only meant to leave it thus : " Whether in fact such 
bills had usually been negotiated." I think (upon the merits) all the 
cases in King William's time are founded on mistaken principles. The 
first struggle of the merchants, (which made Holt so angry with them, 
Ld. Eaym. 758,) to make inland bills of exchange in the nature of spe- 
cialties, and to declare upon them as such, was certainly wrong on their 
parts ; and it was admitted, they might declare on general indebitatus 



38 EOSS ON COMMERCIAL LAW. 

assumpsit, and give these bills in evidence. But the reasons given by 
the Judges, why no action can be brought by the holder of such a bill, 
payable to bearer, are equally ill-founded. First, it is said they were 
never intended to be negotiable : Guju^ contrarium est verum. For when 
payable " to A. B. or bearer," they are clearly intended to be transferred 
in the most easy manner, even without indorsement. Also, it is said, 
that dangers will arise, if, upon a casual loss, the finder becomes entitled 
(as bearer) to maintain his action for it. But the bearer must show it 
came to him, bonS, fide, upon valuable consideration. And then there is 
no more danger here than in losing an indorsed bill of exchange made 
payable to A. B. or order. 

' It is also said, that the action might be brought in the name of the 
person to whom it is first payable. In this very case it could not. Can 
an action be brought in the name of ship Fortune ? Many bills are pay- 
able to bearer only, without inserting any person's name. And if pay- 
able "to A. B. or bearer," A. B. may not be found, may refuse to lend 
his name, may release, may become bankrupt, &c., which would put the 
bearer's property on a very precarious footing. Besides, this would be 
giving a third person (the drawee) an option, whether he will pay it to 
the bearer or no, which may be abused to unjust or corrupt purposes. 
r*4.9T •'■^ Hinton's case, 2 Show. 235, in *the latter end of Charles the 
L J Second's time, it is taken for granted, that such bills are recover- 
able by the bearer, if he comes to them bona fide, To this succeeded 
all the cases in- King William's time, which adopted the other erroneous 
principle ; and in all these there is great confusion ; for, without search- 
ing the record, one cannot tell whether they arose upon promissory notes, 
or inland bills of exchange. Yet in equity (2 Freem. 258,) it was even 
then held, that a bill payable " to A, or bearer," was like so much mo- 
ney paid : whatever transactions may be between A. and the drawer of 
the bill, the bearer shall have his whole money. And, in Salkeld, 126, 
Holt held, that if a bank note be lost, payable to A. or bearer, and a 
stranger, who finds it, transfers it to C. for good consideration, trover will 
not lie against C; because, by the course of trade, there is a property in 
the assignee or bearer. The Statute, 3 & 4 Ann. c. 9, subsequent to 
these cases, was made to put promissory notes, in all respects upon the 
same footing as inland bills of exchange. The Statute expressly provides 
for notes payable to bearer; and therefore it may reasonably be construed 
' to suppose, that such was the law for bills also ; for else it would make a 
promissory note more negotiable than a bill of exchange. There has 
since been no doubt, but that actions may be brought by bearers of such 
promissory notes against the drawers. In a late case. Miller and Race, 
a bank note, though stolen out of the mail, yet being negotiated and 
coming to the bearer bonS, fide, was held recoverable. In Walmsley and 
Child, the defendant gave a shop note to A. or bearer. A. lost it and 
demanded the money at Child's. They agreed to pay it, if he vrould 
give them security that the note should never be forthcoming to charge 
them. He refused, but offered a release, being advised that no action 
could be brought by bearer in case A. released. They still refused, and 
a bill was brought to compel the payment. Lord Hardwicke dismissed 



BILLS or EXCHANGE. 39 

it, unless A. would give security. It appeared, that in their books no 
credit was raised but to bearer. Bearer debtor, and bearer creditor. No 
other name made use of in entering this sort of note. As this is my 
opinion in point of law, and as I unadvisedly left this point to the jury, 
there must be a new trial upon the ground of my misdirection. And as 
both parties *are innocent men, I think the law should decide be- r-^Ao -■ 
tween them, and not leave to the partiality of the drawee to pay L J 
whichever he likes best. 

But upon the second court the present case is quite clear, beyond all 
dispute, for undoubtedly an action for money had and received to the 
plaintiff's use, may be brought by the bon§, fide bearer of a note made 
payable to bearer. There is no case to the contrary. It was certainly 
money received for the use of the original advancer of it, and, if so, it 
is for the use of the person who has the note as bearer. In this case 
Bicknell himself might undoubtedly have brought this action. He lost 
the note, and it came bona fide and in the course of trade into the hands 
of the present plantiff, who paid a full and fair consideration for it. 
Bicknell and the plaintiff are both innocent. The law must determine 
which of them is to stand to the loss and by law it falls upon Bicknell. 

Mr. Justice Wilmot. — If a verdict be given without evidence at all, 
or against plain evidence or against law, it ought not to stand. The two 
matters Mt to the consideration of the jury upon this trial, were, 
" Whether the plaintiff came by this note fairly and bona fide ?" and, 
" Whether such notes or bills as this is, are in fact and practice negotiated ?" 
The latter is as plain and notorious, as that there is a Bank of England : 
no man can doubt it. The verdict is therefore against evidence as to this 
point. Probably the jury took upon themselves to consider, " Whether 
such bills or notes as this is, were in their own nature negotiable ?" But this 
is a point of law : and by law they are negotiable. Their verdict is there- 
fore against law, and ought to be set aside. For, though when facts and law 
happen to be so complicated and intermixed that a jury cannot help taking 
both into their consideration, it may be diflScult or even impossible for them 
to avoid founding their verdict upon both ; yet they are not at liberty to 
determine contrary to law : they ought to take their notion of law from 
the direction of the Judge who tries the cause. Formerly a jury would 
have been liable to an attaint for such a verdict : now the Court control 
their verdicts, by setting them aside and granting a new trial. 

*As to the other matter, the manner how this plaintiff came ^ ^.. _ 
by the note. It appears to have been taken by him fairly and L J 
bona fide, in the course of trade, and even with the greatest caution j he 
made inquiry about it, and then gave the change for it. And there is 
not the least imputation or pretence of suspicion that he had any notice of 
its being a lost note. So that this verdict is clearly against law : for, if 
the note be negotiable and the plaintiff came fairly by it, he was entitled 
to recover. Though both the claimants were innocent j yet, as Bicknell ■ 
lost the note, and Grant took it in the course of trade, bona fide and 
upon a valuable consideration. Grant has the better equity. But if their 
equity were only equal, it is a known and a good rule, that " Melior est 
conditio jaossidentis :" and that would be sufficient to turn the scale. If 



40 ROSS ON COMMERCIAL LAW, 

there was negligence on one side, and none on the other, that also would 
turn the scale : and if there be any on either side in this case, it should 
seem to be rather imputable to the person who lost it, than to him who 
thus took it in the course of trade. 

If this bearer cannot bring an action upon it, nobody can : or as it is 
not made payable to any particular person by name, no action can be 
brought in the name of such particular person. But this is a negotiable 
note ; and the action may be brought in the name of the bearer. ^ "Bear, 
er" is descriptio personse ; and a person may take by that description as 
well as by any other. In the nature of the contract, there is no impro- 
priety in his doing so. It is ^a contract " to pay the bearer, or to the 
person to whom he shall deliver it," (whether it be a note or a bill of 
exchange :) and it is repugnant to the contract, that the drawer should 
object " that the bearer has no right to demand payment from him." 
Then upon the cases : Hinton's case in 2 Show. 235 is decisive : and it 
is agreeable to common sense and reason, " that if a man comes by such 
a note or bill, fairly and on a valuable consideration, he should have a 
right to maintain an action upon it as bearer." The reasons given in the 
cases that are opposite to this, are altogether unsatisfactory. Those deter- 
minations strike at this great branch of commerce : if they were to pre- 
vail, they would put an end to all this species of it. Who would take ii, 
bill or note payable to one or bearer, if the person named in it might 
r *4.'i 1 r^l^^s® i*> <"■ if *^ debt of his might be set off against it ? On 
L J the other hand, it is but just and reasonable, that if the bearer 
brings the action, he ought to entitle himself to it on a valuable consid- 
eration ; and strictly to prove his coming by it bonS, fide. Even before 
the Statute of 3 & 4 Anne, Lord C^iief Justice Holt himself thought an 
indebitatus assumpsit for money lent, or for money had and received, 
might be maintained upon such a note : and if it was a question ante- 
cedent to that Act, I should stand by that first ease of Hinton, rather 
than the latter ones which differ from it. But that Statute was made 
expressly and on purpose to obviate these doubts. However, if you 
would suppose it made to introduce a new law, and that such an action 
could not have been maintained before the making of it ; yet it is the 
manifest and professed intent of the Act to put promissory notes upon 
the same foot with inland bills of exchange : and it clearly means to 
_ make notes payable to bearer, liable to actions brought upon such notes 
as upon a specialty. And no case having happened upon this head since 
the making of the Statute, is a circumstance which shows that the Stat- 
ute was so understood, and that the true and sound construction of it is, 
" That promissory notes should be put upon the same foot with inland 
bills of exchange." If it should be construed otherwise, it would fol- 
low, " That inland bills of exchange would be upon a better foot than 
promissory notes ;" which would be contrary to the words and meaning 
of the Statute. This, now under consideration, is a negotiable instru- 
ment, which, I think, participates more of the nature of a promissory 
note than of a bill of exchange. But taking it as a bill of exchange. 
A bill of exchange is a promise " to pay the money, if the drawee does 



BILLS OF EXOHANGE. 41 

not pay it ; " consequently the payee may bring the action against the 
drawer. 

In this particular case, if the bearer cannot bring the action, who can ? 
no person at all is named : it is, " pay to ship Fortune, or bearer." There- 
fore this particular case is out of all the cases cited. For they say " that 
the action must be brought in the name of the person to whom the note 
is made payable :" but there is no such person in the present case. It 
would be of infinite inconvenience, and would introduce the utmost 
confusion, if it were to be established " that the bearer of a bill or 
*note made payable to bearer could not maintain his action upon ^ ^ , „ - 
it." As to its being negotiable within the bills of mortality and L J 
no further, there is no colour for such a distinction : it must be negotia- 
ble everywhere, if it is negotiable at all. Upon the whole, I thing this to 
be a verdict against law ; and am of opinion that it ought to be set aside. 

Mr. Justice Yates. — It was not within the province of the jury to 
determine upon the negotiability of this note : it was a question of law, 
not of fact, " whether such a bill or note was or was not negotiable." 
And nothing can be more peculiarly negotiable than a draught or bill 
payable to bearer; which is, in its nature, payable from hand to hand, 
toties quoties. I am clearly of opinion, that an action will lie for the 
bearer of such a bill. The reasons given against it, in the cases which 
have been cited by the defendant's counsel, are not at all satisfactory. It 
had been doubted, it is true, " whether that species of action where the 
plaintiflf declares upon the note itself as upon a specialty, was proper ;" 
but here is a count upon a general indebitatus assumpsit for money had 
and received to the plantiff's use. The question " whether he can main- 
tain this action," depends upon its being assignable or not. The original 
advancer of the money manifestly appears to have had the money in the 
hands of the drawer : and therefore he was certainly entitled to bring 
this action. And if he transfers his property to another person, that 
other person may also maintain the like action j whoever has money in 
the hands of another, may bring such an action against him. This ap- 
pears from the determination of the case of Ward v. Evans, reported in 2 
Ld. Eaym. 930, where not a shilling of money had passed between the 
plaintiff and defendant ; and yet Holt and Powell both held, " that an 
indebitatus assumpsit for moneys received to the plaintiff's use, properly 
lay." In the present ease, the drawer had money in his hands belonging 
to Bicknell ; and Bicknell must be considered as having delivered this 
instrument to the plaintiff Grant; which is tantamount to an indorse- 
ment. A real indorsement of a note payable to bearer would have been 
absurd. The delivery of it must indeed be proved : and the circum- 
stances of the present case do amount to a proof of a *delivery of ^ ^a't-i 
it to the plaintiff. And there is no doubt about his having come L J 
by it fairly, bonS. fide, and on a valuable consideration. 

There would be great inconveniences, if such an action as this is, might 
not be brought by the bearer. If no action could be brought but in the 
name of the person to whom the bill or note was originally made pay- 
able, that person might release the action ; or a debt due from him might 
bo set off against it, in account : and so the true owner of the note might 



42 BOSS ON COMMERCIAL LAW. 

lose the whole or part of it, though it was transferred to him upon a 
valuable consideration. As to the notion of its being negotiable in Lon- 
don, and not elsewhere, there is no foundation for such an_ imagination. 
It must be equally so out of London as in London:' and it is just the 
same as a bank-note. Upon the whole I think the jury have done wrong : 
and therefore the verdict ought to be set aside. ' 



IN ENGLAND, IN ORDER TO RENDER A BILL OR NOTE NEGOTIABLE, 
IT MUST BE PAYABLE TO ORDER, OR BEARER, OR WITH SOME OTHER 
EQUIVALENT WORDS, BUT IT IS NOT ESSENTIAL TO THE VALIDITY OF 
SUCH AN INSTRUMENT THAT IT SHOULD BE NEGOTIABLE. 

SMITH v. KENDALL. 

Nov. 21, 1'794.— B. 6 T. R. 123. 

Assumpsit for money paid by the plaintiff to the use of a party de- 
ceased, whose executor the defendant was, for money lent to him, and on 
an account stated with the testator and another with the executor. The 
defendant pleaded the Statute of Limitations. To this the plaintiff re- 
plied, that the latitat was sued out on the 26th of September, 1793, and 
that the cause of action accrued within six years before that time; on 
which issue was taken. 

On the trial before Lord Kenyon, the plaintiff gave the following note 
in evidence : " Three months after date I promise to pay to Mr. Smith, 
currier, 40?., value received in trust for Mrs. E. Thompson, as witness my 
r #48 1 ^^^^j ^- Askew, 25th June, 1787." *The defendant objected, 
L J 1st, That this note was only evidence of money lent or paid to 
Mrs. Thompson, and not by the plaintiff to the testator; and 2dly, That 
this was not a promissory note within the statute, and if not that the 
cause of action accrued on the 25th of September, 1787, three months 
after the date of the note, and consequently that six years had elapsed 
before the suing out of the writ. Tte plaintiff answered, that as the 
note was payable to him, it was more proper to bring the action in his 
name than in that of Mrs. Thompson, and that the money when recovered 
by him would be recovered for her use ; and in answer to the second ob- 
jection, that this was a promissory note within the statute, in which case 
three days were allowed ; and of course that six years had not expired 
when the latitat was sued out. A verdict was taken for the defendant, 
leave being given to the plaintiff to move to set that verdict aside, and 
to enter a verdict for him, if this Court thought he was entitled to re- 
cover. 

A motion was accordingly made for that purpose ; and on a former day 
Erskine and Henderson, for the plaintiff, referred to these cases, to show 
that this was a promissory note within the statute ; Cramlington v. Evans, 
1 Show. 4 ; Moore v. Paine, Kep. Temp. Hardw. 288 ; Lewis v. Orde, 
cor. Lord Hardwicke at nisi prius ; Cunningham on Bills of Exchange, 
113; Popplewell v. Wilson, 1 Strange, 264; Chadwick v. Allen, ib. 



BILLSOFEXOHANGE. 43 

706 ; Ancher v. The Governor, &c., of the Bank of England, Dougl. 
637 ; and Brown v. Harraden, ante, 4 vol. 148. 

Garrow and Bayley, contra, mentioned the following cases : Josselyn 
V. L'Acier, 10 Mod. 316 ; Banbury v. Lisset, 2 Strange, 1211 ; Cham- 
berlyn v. Delarive, 2 Wils. 353 j and Dawkea v. Lord Deloraine, 3 Wils. 
207. And on this day 

Lord Kenyon, Ch. J., said, — If this were res Integra, and there were 
no decision upon the subject, there would be a great deal of weight in 
the defendant's objection : but it was decided in a case in Lord Raymond 
on demurrer, that a note payable to B. without adding or to his order, 
or to bearer, was a legal note within the Act of Parliament. It is also 
said in Marius *that a note may be made payable either to A. or ^ ^.^ -i 
bearer, A. or order, or to A. only. In addition to these authori- L J 
ties, I have made inquiries among diflferent merchants respecting the 
practice in allowing the three days' grace, the result of which is that the 
Bank of England and the merchants in London allow the three days' 
grace on notes like the present. The opinion of merchants, indeed, 
would not govern this Court in a question at law, but I am glad to find 
that the practice of the commercial world coincides with the decision of 
a Court of law. Therefore I think that it would be dangerous now to 
shake that practice, which is warranted by a solemn decision of this 
Court, by any speculative reasoning upon the subject, and consequently 
this rule must be made absolute to render a verdict for the plaintiff. 

Bule absolute. 



1. In the case of the King v. Box, 6 Taunt. 325, a prisoner had been found 
guilty of forging a promissory note in the following terms, — " On demand we 
promise to pay to Mesdames Sarah Wallis and Sarah Doubffire, stewardesses 
for the time being of the Provident Daughter's Society, or their successors in 
office, £64, with 5 per cent, interest for the same ; value received this 1th day of 
February 1805. For Felix Calvert & Co., John Forster." It was moved in arrest 
of judgment that this was no promissory note, and the case was argued before 
the twelve Judges. Le Blanc, J., delivered judgment, and observed, — " The 
objection to this instrument was founded on this circumstance, that it appears 
to be made payable to two ladies, describing them as stewardesses of a provi- 
dent society, or their successors in office ; and that this society not being 
enrolled according to the Statute 33 Geo. III., c. 34, this note was not capable 
to enure to their successors, and was not negotiable. The judges are of opinion 
that this*s, as stated in the indictment, a valid promissory note within the Stat- 
ute of Geo. II. It is not necessary that such a note should be of itself negoti- 
able, it is sufficient that it should be a note for the certain payment of a sum 
of money, whether negotiable or not. And though these ladies were not at the 
time legally stewardesses, yet it was a description by which they were known at 
the time ; and though they *could not legally have successors in office, rscQi 
yet, in case of their decease, their executors and administrators might '■ ^ 
sue, and they themselves, during their life might recover on it. Therefore it is 
an instrument capable of being the subject of forgery, and there is no ground 
to arrest the judgment; and the Judges are all of opinion that the conviction is 
right." 

2. If the words " or order," have been omitted by mistake, they may be 
inserted afterwards without a new stamp. The case of Henshaw v. Cox, 3 Bsp. 
246, was an action of assumpsit to recover the value of a bill of exchange 



44 ROSSONOOMMEKCIALIiAW. 

against the payer, who had indorsed it to the plaintiffs, to whom he wag 
indebted. The words " or order" had been omitted in drawing the bill, but 
were afterwards inserted. It was contended for the defendant, mat he did not 
consent to the alterations which brought the case within that of Masters v. 
Miller, 4 T. R. 320, and that the alteration was in a material part, as it might 
change the right of set-off by making that negotiable which was intended to go 
only in a particular account. It was further contended, that if not within that 
case it was within the case of Bowman v. Nicholls, 5 T. R. 537, and that a new 
stamp was necessary by reason of the alteration in the instrument. Mr. Jus- 
tice Le Blanc, observed. — "It can hardly be contended that the defendant did 
not consent to the alteration, making this a negotiable bill, as he himself 
indorsed it, and so considered it as negotiable ; but this I will leave to the Jury. 
As to the stamp, I think no new stamp was necessary. This was not a new 
instrument, as in the case of Bowman v. Nicholls, but merely a correction of a 
mistake, and in furtherance of the original intention of the parties. It would 
be different if the alteration had been in the date, or of the time when it was 
to be paid ; that would be a most material part ; this, in my opinion, is not so, 
and does not vitiate the bill." The Jury said that this sort of alteration was 
very common ; and found a verdict for the plaintiff. 

3. Although a bill or note does not bear to be transferable, the party trans- 
ferring will be liable. In Hill v. Lewis, 1 Salk. 131, it was objected that the bill 
founded on was payable to the defendant only without the words or his order, and 
that it was therefore not assignable byindorsement. The Reporter states, — " The 
Chief Justice Holt did agree that the indorsement of this bill did not make 
him that drew the bill chargeable to the indorser ; for the words, or to Jiis 
order, give authority to the plaintiff to assign by indorsement, and it is an 
agreement by the first drawer that he would answer it to the assignor. But the 
indorsement of a bill which has not the words, or to Ms order, is good, or of the 
same effect between the indorser and the indorsee, to make the indorser charge- 
able to the indorsee." 

r*-n ^- This law, however, was laid down before the dlate of the Stamp 
L J *Acts, which have been found to interfere with the application of that 
law, on the ground that where a bill is payable to the payee only, the stamp 
becomes exhausted, and that a new stamp wiU be required in order to constitute 
a new bill between the indorser and the indorsee. The case of Plimley v. 
Westley, 2 Bing. 249, was an action on a promissory note with a count for goods 
sold and delivered. The note was not made payable to order, and had been 
indorsed to the plaintiff by the defendant, who was also an indorsee. In 
answer to the objection that the plaintiff had not given the defender, due notice 
of the dishonour of the note, the plaintiff contended, that the note not being 
transferable for want of the words " or order," he had no claim against the 
holder or the indorsers, and that therefore in not presenting the note he had 
been guilty of no laches. It was further contended, that the plaintiff could not 
have sued the defendant as being virtually by his indorsement the maker of a 
new note payable to the plaintiff, unless there had been a second stamp for that 
indorsement. Chief Justice Tindal, — " I think the plaintiffs are entitled to 
judgment on the count which proceeds on the original consideration for the 
debt. The question is, whether the original claim has been satisfied by the 
delivery of this note or not, and we must see whether the plaintiffs' had any 
means of enforcing payment of the note, or whether it was in their hands 
merely waste paper. Now it is clear, from the oases of Hill v. Lewis, and 
Smith V. Kendal, that unless there be on the instrument authority to indorse, 
the indorser can enforce payment neither of a promissory note nor of a bill 
of exchange. Here there was a single promise to pay Ryton and Walton, 
and no one else. The payee had no authority to indorse, and the holder 
could neither sue the indorser nor the indorser the maker. I don't see, there- 
fore what prejudice the defendant could have sustained. Had there been a 
second stamp, the defendant's indorsement might have operated as the making 
a new note. But as this was a valid promissory note at first, the stamp then 
affixed was exhausted, and the second transfer was a nullity for want of a 



BILLS OF EXOH AUG i:. 45 

second stamp. The plaintiffs therefore having no security of which they could 
avail themselves, were remitted to their original right." 

5. In Scotland a bill or note is negotiable without the words " to order." It 
was so settled in Chriohton v. Gibson, January 1726. In answer to the claim 
of the indorsee it was argued, — When bills debord from the settled style and 
tenor, they have not the extraordinary privileges, which are given only to writs 
of a certain form, by law and custom. It is not disputed, that the biU in ques- 
tion may be supported as a good ground of action, and be transmissible by assig- 
nation, having the common solemnities of law ; but that it can pass by rseoi 
*indorsation, which is an extraordinary privilege, will never be allowed. '- ■' 
And this is the opinion of Marius and Scarlet, who maintain, in general, with- 
out any distinction, that no man can effectually indorse a bill but what is 
made payable to himself and his order. The lords preferred the indorsee. 



A MERE ACKNOWLEDGMENT OF DEBT DOES NOT CONSTITUTE A PRO- 
MISSORY NOTE, AND DOES NOT REQUIRE ANY STAMP, AND UNLESS THE 
INSTRUMENT CONTAINS AN ORDER OR PROMISE TO PAY A SUM OF 
MONEY, IT DOES NOT REQUIRE A BILL STAMP. 

I JONES V. SIMPSON. 

Nov. 14, 1823.— E. 2 B. & C. 318. 9 B. C. L. B. 

This was a case sent \)j the Vice-Chancellor for the opinion of the 
Court of King's Bench. 

In the year 1811, W. Blackburn carried on the business of a merchant 
at Saddleworth, in Yorkshire, and the defendant, Simpson, carried on the 
business of a merchant, in partnership with the defendant Wilson, of 
Quebec, in Canada, such business being carried on in London in the 
name of Simpson alone, and at Quebec under the firm of Gr. Wilson and 
Co. In the year 1811, W. Blackburn delivered to Simpson twelve 
bales of woollen cloth, invoiced at £1640, 17s. lOd., to be shipped and 
consigned to the firm of G. Wilson and Co. at Quebec, to be sold there 
on the account and at the risk of Blackburn. They were duly shipped 
by Simpson, and consigned to and received by the firm of G-. Wilson and 
Co. at Quebec, by whom the same were sold, and the proceeds, or some 
parts thereof, were afterwards remitted to Simpson. 

On the 7th of A,igust, Blackburn wrote and sent to Simpson the fol- 
lowing order, — " Mr. R. Simpson, please to pay to Nelson, on account of 
the assignees of Oakley, Overend, and Oakley, the proceeds of a ship- 
ment of twelve bales of goods, value about i62000, consigned by me to 

you." 

On the 21st of the same month, Simpson wrote and sent to *the r *cq -i 
defendant Nelson, as one of the assignees of Oakley, Overend, L -J 
and Oakley, the following undertaking, — "Shipped on board the Sarah, 
from London to Quebec, for the account of W. Blackburn, twelve bales 
of woollen cloth, value, as per invoice, £1640, 17s. lOd. ; there to be sold, 
and the proceeds to be paid by his order, dated the 7th instant, to the 
assignees of Oakley, Overend, and Oakley. In pursuance of the said 
order of Blackburn, I do hereby consign and engage to pay over the full 

April, 1854.— 4 



46 ROSS ON OOMMEKCIAL LAW. 

amount of the net proceeds of the said twelve bales of woollen cloths as 
I may from time to time receive the same, . unto the said assignees 
without delay." 

On the 15th July, 1812, a commission of bankruptcy was issued 
against the said W. Blackburn, under which the plaintiffs, Jones and 
Hirst, were chosen assignees. Pursuant to an order made in this cause, 
bearing date the 23d day of July, 1818, Simpson paid into the Bank of 
England, in the name of the Accountant-General, in trust in this cause, 
the sum of £409, 5s. Id., in respect of the proceeds of the said bales of 
woollen cloths. Simpson thereafter became bankrupt, and the de- 
fendants W. Fulford and T. Bradley were the assignees under the com- 
mission against him. 

The question for the opinion of the Court was, Whether the above two 
instruments, or either, and which of them, require such a stamp as the 
Stamp Acts impose upon bills, drafts, or orders for payment of money ? 

Litiledale for the Plaintiffs.— The 48 Geo. III., c. 149, was the Stamp 
Act in force at the time when these instruments were signed. Now in 
schedule, part 1, title Bill of Exchange, certain duties are first imposed 
upon bills, with reference to the sums for which they are made payable; 
and then upon any bill, draft, or order for the payment of any sum of 
money weekly, monthly, or at any other stated period, -where the total 
amount of the money shall be specified therein, or can be ascertained 
therefrom, the same duty is imposed as upon a bill for a sum equal to 
the total amount. [Abbqit, C. J. — No sum is specified in this instance 
nor can it be ascertained from the instrument ; that clause is therefore 
wholly immaterial.] It shows that the sum to be paid may be ascer- 
r *'i4. 1 *^^''^'^ i"* different *ways ; and if in any way a sum certain appears 
L -I to be due, that is the sum to regulate the duty. The next 
clause provides for the case where the total amount of the money thereby 
mentioned to be payable shall be indefinite, and then the same duty at- 
taches as on a bill for the sum expressed only. [Abbott, C. J. — Here 
no specific sum was expressed. Suppose the order be to pay all the 
money due, what is the duty to be imposed ?] The schedule then pro- 
ceeds to declare, that several instruments shall be deemed bills, drafts, 
or orders for the payment of money, and one of them is a draft or order 
for the payment of a sum of money out of a particular fund, which may 
or may not be available. Now here the order is for the payment of the 
proceeds of a shipment, value about £2000, or in other words, for the 
payment of a sum of money out of a fund which may or may not be 
available, and when the amount of those proceeds was ascertained, a 
stamp appropriate to a bill for that amount ought to have been affixed to 
the instrument. A similar clause in the Stamp Act, 55 G-eo. III. c. 
184, was considered to apply to an instrument of this description, in Fir- 
bank V. Bell, 1 B. & A. 36, and Butts v. Swan, 2 B. & B. 78. There 
indeed the sums payable were specified upon the face of the instrument. 
[Baylet, J.— The act imposes duties upon bills of exchange and pro- 
missory notes, which were well known instruments. There were other 
instruments, however, nearly in the same form, but which did not come 
within the description of bills of exchange or promissory notes, because 



BILLS OF EXCHANGE. 47 

the money was payable out of a particular fund, or upon a contingency, 
and the Legislature probably had those instruments in contemplation in 
the clause which has been referred to. This instrument, however, would 
not be a bill of exchange if the proceeds were not payai)le out of a par- 
ticular fund, because the order was not for a specific amount.] 

Marryat was to have argued on the other side, but the Court said the 
case was too clear to admit of any doubt. 

The following certificate was afterwards sent : — 

This case has been argued before us, and we are of opinion that neither 
of the two instruments required such a stamp as *the Stamp Acts ^^ , ^ _ 
impose on bills, drafts, or orders for the payment of money. L J 

C. Abbott, 
J. Bayley, 

G. S. HOLROYD, 

W. D. Best. 



II TOMKINS V. ASHBY. 

May 23, 1827.— E. 6 B. & 0. 541. 13 E. 0. L. R. 

Assumpsit on the money counts and accounts stated. Plea, the gen- 
eral issue. At the trial before Lord Tenterden, C. J., at the Gruildhall 
sittings after last Michaelmas term, the following memorandum, signed 
by the defendant, was offered in evidence on behalf of the plaintiff, — 
" September 25th, 1824, Mr. Tomkins has left in my hands £200." This 
document was not stamped, and on that ground it was contended for the 
defendant that it could not be received in evidence. The Lord Chief 
Justice admitted it, and the plaintiff had a verdict for £200. In Hilary 
term a rule nisi for entering a nonsuit was obtained ; and now, 

Marryat showed cause. In Fisher v. Leslie, 1 Esp. 426, it was held, 
that an I U, being a mere acknowledgment of a debt, was admissible 
in evidence without a stamp. The memorandum in this case was nothing 
more than such an acknowledgment, it was not a receipt nor a promissory 
note, and there is nothing in the Stamp Act now in force, 55 Geo. III., 
c. 184, which makes a stamp necessary for such an instrument. 

The Attorney-General, contra. — It is clear that the memorandum 
ought to have had a receipt stamp. The Stamp Act exempts from duty 
" receipts given for money deposited in the Bank of England or Bank of 
Scotland, or Eoyal Bank of Scotland, or in the Bank of the British Linen 
Company in Scotland, or in the hands of any banker or bankers, to be 
accounted for on demand." But for that exception such *receipts r^^Kfj-i 
would be liable to duty. The present defendant not being a L J 
banker is not within the exemption, the memorandum was therefore im- 
properly received in evidence. 

Lord Tenterden, C. J I am of opinion that a stamp was not neces- 
sary in this case. Acts of Parliament imposing duties are so to be con- 
strued as not to make any instruments liable to them unless manifestly 
within the intention of the Legislature. Looking at the schedule of the 



48 ROSSONOOMMEEOIAIiIiA-W. 

55 G-eo. III., c. 184, we find a duty imposed upon every ," receipt or 
discharge given for or upon tlie payment of money," Then there is a 
declaration, that "any note or memorandum given to any person upon 
payment of money, whereby any sum of money, debt, or demand, or any 
part of any debt or demand therein specified, and amounting to £2 and 
upwards, shall be acknowledged, to have been paid, settled, balanced,, or 
otherwise discharged, shall be deemed a receipt." AH these words im- 
port that something for;nerly due has been discharged. I think, there- 
fore, that the memorandum in question is not within the Act, and does 
not stand in peed of any exception. The exception, however, is relief on 
to show that such instruments were within the contemplation of the Le- 
gislature, but it is not surprising that the Bank of England, and bankers 
in general, in order to remove all doubt, should be anxious to procure 
the insertion of that exemption. Inasmuch then as all the words in the 
Act describing what shall be deemed a receipt apply to the discharge of 
money antecedently due, and not to an acknowledgment that money has 
been deposited to be accounted for, I think that no stamp was, in this 
case, necessary, and that the rule for a nonsuit must be discharged. 

Rule discharged. 



Ill — PIRIE V. SMITH. 

Feb. 28, 1833.— S. 11 S. 473. 

r *57 1 '^^^ ^^*^ "^^^^ ■'^'"^ raised an action, carried on by his repre- 
L J sentatives after his death, against the executrix of the *late John 
Smith, concluding for payment of various advances alleged to have been 
made to him, and founding, inter alia, on the four following improbative 
documents granted by Smith, and written on unstamped paper : 

"Cairnheg, 12th August, 1816.— Sir,— I hereby acknowledge that I 
have this day received from you ^20 sterling, for which I shall account 
for — I am, &c. (Signed) John Smith." 

"Cairnheg, 2&h August, 1816.— Dear Sir,_I hereby acknowledge 

that I have received from you £40 sterling, for which I shall account 

I am, &c. (Signed) John Smith." 

"Newton, Uth December, 1825 — Dear Sir,_I have this day re- 
ceived from you £25 sterling, which I shall repay you when demanded. 
— I am, &c. (Signed) John Smith." 

"Mwton, 2Qth December, 1825.— Dear Sir,— I have this day re- 
ceived from you the sum of J35 sterling, which I shall repay you when 
demanded — I am, &c. (Signed) John Smith." 

In defence, so far as regarded these documents, it was pleaded, that 
either as receipts pr promissory notes, they required to have been stamped 
under the 55 Geo. III. c. 184, and could not now have a stamp impressed 
upon them. '^ 

The Lord Ordinary held that they were not receipts, nor promissory 
notes, in the meaning of the statute, and pronounced an interlocutor 
allowing the pursuers « to procure them to be properly stamped," adding 



BILLSOPEXCHANGE. 49 

the following note : — " Two of the documents in question acknowledge 
that money was received, which the granter binds himself ' to account 
for;' the other two are acknowledgments of the receipts of certain sums, 
which the granter binds himself ' to repay' the lender when demanded. 
The Lord Ordinary does not think that such documents can be considered 
as promissory notes, and therefore unstampable. He considers the pro- 
per test for ascertaining the character of a document in that particular, to 
be its capability of negotiation, or transference by indorsation, a quality 
which these acknowledgments do not seem to possess.' It is true that 
cases have occurred in England, in which writings, binding a party to be 
accountable or responsible for sums of money, were held to be promissory 
notes. But in those cases there occurred the very important additional 
words, ' or order ;' and it rather appears *from the reports, that, in ^^ - „ -, 
consequence of these words, which excluded the notion of a pro- L J 
per accounting, the obligation to account, or to be responsible, was con- 
strued as equivalent to an obligation to pay. Here there is an obliga- 
tion to account ; but there is neither the addition ' on demand,' or ' to 
order.' In regard to the other two documents, the granter acknowledges 
receipt of a sum, which ' I shall repay you when demanded,' a form of 
exception which, as it appears to the Lord Ordinary, implies a mere re- 
payment or settlement of the debt with the lender, and does not amount 
to that absolute promise to pay, which is required to raise, without the 
express addition of ' or order,' the implication olf trausmissibility to an 
indorsee." 

The defenders having reclaimed, the Court ordered Cases. 

Pleaded for the Pursuers. — The Stamp Acts, especially where the 
penalty of absolute nullity is imposed, must be strictly construed, so as 
not to affect any documents not in the clearest manner therein included. 

As to the documents in question being considered receipts, they can- 
not be deemed so in the sense of the statute ; for, to constitute such, the 
documents must import a discharge of an existing obligation, and not 
simply acknowledge the delivery of a sum of money, for which the party 
binds himself to account. 

As to their being held promissory notes, it is obvious the first two are 
not so, there being no promise to pay, which is of the essence of a pro- 
missory note, but merely an obligation to account ; and as to the other 
two, although they differ from the former in containing an obligation to 
repay when deiilanded, they still cannot be held promissory notes. These 
are documents of a known definite form, according to mercantile usage, 
which form they must possess to entitle them to the privileges of pro- 
missory notes. In particular, it is of the essence of promissory notes, 
that they should be capable of transmission by indorsation, and of form- 
ing the grounds of summary diligence ; and if they be not, they cannot 
be considered as promissory notes. Here, however, there is no promise 
to pay to the granter, " or order," so as to give an express warrant for 
their transmission by indorsation, while the use of the term " repay," 
♦limits the obligation to the particular individual to whom they r :).kq -i 
were granted, and so excludes any implied power of transmission ^ -■ 
in this way. Then it scarcely could be maintained that summary dill- 



50 ROSS ON COMMERCIAL LAW. 

gence could proceed on these documents, which in Scotland is a eonclu- 
sive test as to whether any document is a promissory note or not; and it 
is no answer to say that this will not apply generally, because no sum- 
mary diligence is allowed in England ; for the duty is imposed generally 
on promissory notes, and according to the law of Scotland, summary dili- 
gence is allowed on all promissory notes, so that whatever is by our law 
held not to afford ground for summary diligence, cannot by us be deemed 
a promissory note. 

Pleaded for the Defenders. — There are no grounds for any extreme 
strictness in the construction of the Stamp Acts, which must be enforced 
according to the intendment of the legislature. 

The words of the schedule of the Stamp Act as to receipts, are, "re- 
ceipt or discharge given for or upon the payment of money;" and among 
the exemptions from these general words, are receipts for money "depo- 
sited" in banks. This exemption shows that a discharge was not consi- 
dered essential to the constitution of a "receipt" in the sense of the 
statute, and the words of the schedule clearly import documents of this 
kind as receipts, " given for or upon the payment of money." 

At all events, the documents sued on are promissory notes. No spe- 
cial form of words is necessary to constitute a promissory note. If there 
be an engagement to pay conceived in intelligible words, that is enough. 
Then as to the first two documents, though the obligation be "to account," 
that is truly the same with an obligation to pay; and although there be 
no time of payment specified, a note without this would be good, and 
would be held payable on demand. As to the others again, they are 
exactly the same with documents held to be promissory notes in two late 
cases, with this difference, that the word "repay" is used instead of 
"pay." This, however, constitutes no essential distinction, as the 
acknowledgment of receipt of value, with an obligation to pay, is sub- 
stantially an obligation to repay, and an obligation to " repay" is equally 
r *60 1 *'''^DS'>iissible with an obligation to pay. Nor is it any objec- 
1- -1 tion in Scotland, that the words " or order" are omitted, though 
they might be necessary in England, a bill being with us assignable by 
indorsation, though there be no such words ; while, as to the circum- 
stance of being the foundation of summary diligence, that is a peculiar 
privilege allowed in Scotland, which cannot be made the test of the in- 
tention of a British Stamp Act, to regulate the duties on .documents over 
the whole kingdom. 

The Court directed the cases to be laid before the other judges for 
their opinions. 

Lord Balgeay.— The question in this case relates exclusively to 
the construction of the Stamp Act, 1815. It is necessary to keep this 
in view. 

Pouy documents, granted by the late John Smith to the late John 
Pirie, in Cairnbeg, have been made the subject-matter of a process; and 
in defence against the claim founded on these documents, it is maintained 
that, as they must be considered either as receipts or as promissory notes, 
and as they are not stamped, and cannot, by law, be now stamped, no 
process at law can be maintained thereupon. 



BILLS or EXCHANGE. 51 

Two of the first documents in question are dated in August, 1816. 
The other two are dated in December, 1825. The two firsFare conceived 
in terms different from the two last, and from being different in form, 
they are also different in their legal effects. 

It may be premised, to simplify the argument on the question, 1st, 
That it is impossible to hold any of the four documents, as receipts, ac- 
quittances, or discharges, for money requiring a stamp under the Stam p 
Act. 2nd, It seems to be no less clear that the two first documents in 
1816 cannot be held as promissory notes, falling under the provision of 
the Stamp Act, being nothing but vouchers of deposit money; and, of 
course, 3dly, The only doubt or question which can arise, relates to the 
two last documents dated in December, 182 jj. t And, in conseqenoe, the 
only legal question is, whether such documents so conceived, constitute 
in the eye of law, that writ * which can be denominated a pro- p^™^ , 
misBory note, and so subject to a stamp before it can create a L 1 
legal obligation ? 

In considering a question of this kind, it ought always to be kept in 
view, that all Stamp Acts are to be strictly interpreted, and it is only 
such deeds as are clearly and explicitly defined, which fall under their 
operation. All other deeds, though similar in their nature, are presumed 
to be liberated from that burden, particularly when the sanction of abso- 
lute nullity is imposed. 

It is further to be kept in view, though the question be not asked in 
the present case, that although the document may not be of that kind 
to be considered as a promissory note in mercantile usage, and subject to 
the stamp laws, yet it may, notwithstanding, create in law such a written 
obligation as to constitute a deed of that nature which can lawfully 
become the subject of redintegration by the very stamp laws themselves. 

The proper and simple question is. Whether the two documents in 
1825 are to be considered as promissory notes, entitled to the privileges 
of the law, and of that description of deed entitled to have applied to 
them a certain stamp, in order to give them validity? 

In considering this matter the nature and history of promissory notes 
must be noticed and duly considered. 

By the original common law of Scotland, promissory notes, in re mer- 
catoria, were ineffectual, unless they were in the form of regular deeds. 
The first relaxation from that rule was, to hold them valid, and as suffi- 
cient to authorize an action, though without witnesses, and though not 
holograph j but farther the common law never went. — Ersk. 3, 2, 24. 

By 1681, c. 20, it was ordained, That foreign bills of exchange, from 
or to this realm, on the observance of certain requisites, should be enti- 
tled to have the privilege of suing out upon them summary diligence, in 
the manner as therein described. 

' By 1696, c. 36, it was " declared that the same execution shall be 
competent, and proceed upon inland bills or precepts, as is provided 
upon foreign bills of exchange, by 1681, o. 20." 

By 12 Geo. III., e. 72, and 23 G-eo. III., c. 18, sec. 55, "It ^gg-i 
*is declared that, from and after 15th May, 1772, the same dili- L J 
gence and execution shall be competent, and shall proceed upon promis- 



52 ROSSONOOMMEROIAIiLAW. 

sory notes whether holograph or not, as is provided to pass upon bills of 
exchange, and inland bills by the law of Scotland." 

By the Stamp Acts, forfeign bills and inland bills, with promissory 
notes, are made subject to certain duties impressed upon them, according 
to tbeir sums and terms of payment. 

The form of foreign and inland bills have been settled and adjusted 
by usage and practice, and it is only that species and form of instrument 
so known, that is the subject of these stamp regulations qua such. 

In the same manner, it is only that known and usual form of a money 
promissory note, authorized by law to pass from hand to hand, as a bag 
of money, which was, in the contemplation of the law, required to be 
stamped. Accordingly, it is admitted, that, although there may be 
documents savouring of the form of promissory notes, yet that was an 
exemption from " the duties on promissory notes." 

That such exemptions are declared, is, in fact, an admission that it is 
only promissory notes created for mercantile use and purposes, and 
framed in the usual mercantile form, and entitled to extraordinary privi- 
leges, that were ever meant, like foreign and inland bills, to be subject 
to the stamp laws. 

The form of the document in question is this : — 

"Newton, 26th December, 1825. — Dear Sir, — I have this day re- 
ceived from you the sum of £25 sterling, which I shall repay you when 
demanded. I am, dear Sir, yours truly, 

(Signed) "John Smith. 

"Mr. John Pirie, Cairnbeg." 

Now, supposing this document, framed as above, had been engrossed 
on a legal stamp, effeiring to a promissory note of that value, could 
summary diligence, or letters of inhibition, or summons of adjudication, 
be raised thereupon, constructively, or without a regular previous decree 
of the Court ? This is the test and criterion upon which, it is humbly 
apprehended, it ought to be decided, whether the document be a promis- 
sory note in the view of the stamp laws. 

r *63 1 ^V°^ ^ J"®* construction of the document it is thought that 
L J *it never could be made the ground of summary diligence ; and 
that for the following reasons : — 

1. Although certainly there be not one invariable form legally neces- 
sary to a promissory note, in order that horning, inhibition, or adjudica- 
tion may be competent, yet the document, to be holden as a promissory 
note, must be in some form of a promissory note, whereas the above 
document is in the form of a letter, and not of a promissory note. 

The presumption, therefore, ought to be, that if the document had been 
meant, by the grantor and by the receiver, to be a promissory note, the 
document would truly have been in that form. 

2. Of a document to be holden in law a promissory note, the operative 
words must be expressly and unequivocally promissory or obligatory • 
whereas in the document, the words, "I shall repay," are not expressly 
Eor unequivocally promissory or obligatory. These words may be con- 
strued as a mere declaration of intention or acknowledgment of liabili- 
ties to repay. But even supposing that, from these words, the obliga- 



BILLS OP EXCHANGE. 53 

tion to repay can be inferred with logical or legal certainty, and that 
these words do not admit of any other constraction, all this is not 
enough, in the question of summary diligence, which (in general) cannot 
proceed on any argumentative process, but can only depend on a direct, 
liquid, and unambiguous obligation, such as is known in law and in 
legal practice to warrant summary diligence. 

3. In a document to be holden in law a promissory note, the promisee 
or payee must as such be expressly named in the body of the promissory 
note, directly and unambiguously. 

For instance, " I promise to pay to John Pirie ;" now, in the above 
document, the payee is merely signified by the second personal pronoun 
" you," to which relative pronoun there is not any antecedent, unless the 
word "sir," nor any relative consequent, unless the other relative pro- 
noun "yours." There maybe a critical or logical probability, that these 
words "sir," and "you," and "yours," maybe intended to signify John 
Pirie, named in the address subjoined to the body of the document. But 
this (for the reason already mentioned) is not enough in the question of 
summary diligence. And although^ *in the case of a bill, bear- r:^aA-i 
ing the words " pay to me," and signed by a drawer, the word >- -J 
" me" is holden to mean that drawer, as if he had subjoined his name 
directly to the word " me," yet this is a matter of immemorial and con- 
stant usage. 

It does not follow that the word " you" in a promissory note, without 
any name directly subjoined to that word "you," must, in raising sum- 
mary diligence, be holden to mean a person not previously named in the 
promissory note, although named in an address subjoined to the promis- 
sory note. 

What person is meant by the word " you" may be for a judge or jury 
to find, but not for the officers of the Signet to assume. Besides, it is 
one thing for the drawer of a bill to constitute himself the creditor, by 
using the personal pronoun " me" in the bill drawn by him, the creditor; 
but it is another, and a very difi'erent thing, for the grantor of a promis- 
sory note to constitute " another person" the creditor, by using the 
adversative pronoun " you" in the promissory note granted by him, the 
debtor. 

For these reasons, it is apprehended that the document in question 
never could be made the ground of summary diligence, and if any doubt 
should be entertained, this can be ascertained by the proper officers of 
the law, to whom legally this matter is intrusted. 

Now, supposing it to be proved and established that the document, 
though stamped, never could be the ground of summary diligence, then 
it seems to follow, that it is not a promissory note or obligation, within 
the purview of the stamp laws, and is not amenable to that species of 
duty. 

What is the real, true, and proper nature of the documents is not 
asked, and therefore unnecessary, and perhaps irregular, to say anything 
on the subject. 
In conclusion, it is proper to notice two decisions of the Court referred 



54 EOSSONCOMMEECIAtlAW. 

to, and alleged by the parties as being somewhat adverse to what is now 
stated. 

Alexander v. Alexander, 26th February, 1830, and M'Intosh v. Stew- 
art, 13th May, 1830. 

Now, as to these cases, it may be observed, first, that the question was 
not laid before the Court in that complete manner in which it has now 
r*R'i 1 ^®^° done. Secondly, The correct *distinction between the pro- 
L J per promissory note, and an agreement or acknowledgment, does 
not appear to have been sufficiently adverted to. A document may be 
substantially, as it were, or rather it may be so framed or expressed as, 
in common vulgar language, it may naturally be called a promissory note; 
yet that loose appellation will not make it so, far less, on that ground, 
bring it under the operation of the stamp laws. Thirdly, It should 
always be kept in view, as already noticed, that the whole stamp laws 
are to be strictly interpreted. It is the duty of the officers of the public 
in these matters, specifically to designate what documents are to be 
stamped. If the lieges adopt other forms of documents, that is no pro- 
per evasion of the law. They are exercising their general right of 
exemption. This is perfectly understood by the officers of stamps. The 
question, therefore, constantly recurs, what are the promissory notes 
which were, in the eye of the Legislaturej imposing certain duties there- 
upon ? and it is apprehended to be those which are entitled to certain 
privileges, and upon which summary diligence can be issued if properly 
stamped. Now it is perfectly clear, that upon neither of the documents 
referred to in the cases above noticed, could summary diligence ever have 
been attempted by any officer of the law, even supposing they had been 
extended on the proper stamp. 

Lord Craiqie I concur in preceding opinion. 

Lord Medwyn. — The question at issue is, how far the four documents, 
which are produced in process unstamped, are legal vouchers of debf ? • 

They are objected to as not affording legal evidence of a debt, becausd 
they are not stamped in terms of law. 

I lay entirely out of view the ground of objection, that they are 
receipts for money requiring to be stamped in terms of the stamp laws, 
because they are not receipts " given for or upon the payment of money," 
that is, in discharge of something formerly due. 

In order to dispose of the objection which holds them to be promissory 
notes, it is proper first to consider what are the characteristics of such a 
document. 

r *661 *^° precise form of words is necessary to the constitution of a 
L J promissory note. All that is required is, that there be words, by 
which the grantor promises to pay a specific sum of money to the payee 
on demand, or at a definite period. 

I am not inclined to view its capability of negotiation, or transference 
by indorsation, as the test for ascertaining whether a particular document 
bears the character of a promissory note. For I do not consider this 
circumstance as one of the original qualities or essentialia of the contract 
created in favour of a payee by a promissory note. The original form of 
such an obligation is a promise to pay to the payee alone, and it was 



BILLS or EXCHANGE. 55 

only in the progress of business, and from convenience, that, on the prin- 
ciple of mandate, payment was made to another by order of the payee. 
Accordingly, I understand that a promissory note is not indorsable, 
unless it be granted to the payee or order. But surely it is still a pro- 
missory note, although it be not payable to order, and the payee is enti- 
tled, to recover payment from the granter, who is the obligant directly to 
him. But wore this the proper test of these documents being promissory 
notes, I am not prepared to say that I think they would not pass by in- 
dorsation, that is, by a mandate to pay to another person written on the 
back by the payee. For we do not in this country hold the addition of 
the words " or order," necessary to confer upon a promissory note the 
quality of indorsibility. Precepts for delivery of grain, and debentures, 
may, upon the same principle, be indorsed, although the indorsee has 
not the privilege of an indorsee on a bill, but is viewed merely as an 
assignee. So may an order on a banker. Also an order may be given 
on a shop account to pay it to a third party. And if it were necessary 
to decide that point, I do not see that an indorsee to the documents in 
question might not receive payment of them, if they were not otherwise 
objectionable as documents of debt. 

Neither can I reckon it as the proper test of a document being a pro- 
missory note, that summary diligence could not proceed upon it. This 
is a very peculiar privilege conferred by the laws of this country upon 
bills and promissory notes — so peculiar, that if I am rightly informed, it 
is unknown to the law and practice of any other country, even the most 
commercial ; *and as it was only conferred upon promissory notes ^ ^„- ., 
by Statute so late as the year 1772, 1 cannot hold it as a good L J 
test of a promissory note. A promissory note subscribed by initials, or 
even by a mark, and with or without witnesses, if that was the form used 
by the grantor, will be a good document of debt as a promissory note, 
and a proper ground of action, although it will not warrant summary 
diligence. I think it probable that summary diligence could not proceed 
on such documents as those in question. This was a privilege introduced 
solely in favour of commerce, and I presume would be confined to docu- 
ments in the usual mercantile form. 

I can therefore reckon nothing the test of a promissory note, but that 
it shall contain a promise to pay a certain sum of money to the payee on 
demand, or on a specific day ; and on looking at the terms of the Stamp 
Act, I conceive that this view has been adopted in framing the clauses 
applicable to this document. 

Now, with regard to the documents founded on, it appears plainly that 
they are conceived in very different terms. The two in 1816 acknowledge 
having received from the person to whom they are addressed certain sums 
of money, " for which I shall account." There is here no promise to pay 
any specified sum ; they are mere acknowledgments of money received, 
for the application of which he was to account, and in terms of this obli- 
gation there might be no sum due. I am inclined, then, to hold, that as 
they are not simple receipts for money in discharge of something due, and 
thus are not receipts in terms of the Stamp Acts, so neither are they 
promissory notes; but I consider them as of the nature of special agree- 



56 EOSS ON COMMERCIAL LAW. 

ments, which are among the exemptions from stamp duties on promissory , 
notes, and I conceive that these documents are stampable as such. 

With regard to the documents dated 14th and 26th December, 1825, 
which contain a receipt for a speciiSc sum, with a promise to pay it on 
demand, in these words, " which I shall repay you when demanded," I 
think, on the othey hand, these must be viewed as promissory notes. 
They contain all the essentials of that document, even although they 
should be held not transmissible by indorsation, nor actionable by way of 
r «f o -I summary *diligence. There is a promise to pay the payee a specific 
L -I sum on demand ; and I do not think it deprives the document of 
this character, that the promise is expressed in these terms, " which I 
shall repay ;" and that instead of the payee's name foUov^ing, the pro- 
noun " you" is added, as the obligation is addressed to the payee by 
name. In this opinion I am borne out by two recent eases in Shaw. In 
that of Alexander v. Alexander, February 26, 1830, the document was,— 
" Dear Father, I acknowledge to have this day received from you £80, 
which I shall pay when required. I am, &e. ;" and in M'Intosh y. 
Stewart, 13th May, 1830, the terms were,—" As there is no stamp at 
hand, I acknowledge to be due to you the sum of £19, which sum I pro- 
mise to pay any time required ; and a suflicient stamp bill given if called 
for — all of which you may rely on." In both cases the documents were 
held to be substantially promissory notes, and void as not being stamped. 
The latter of these cases may be thought perhaps stronger than the pre- 
sent, because the party uses the wtDrds, " I promise to pay ;" but " I 
shall pay," seems quite equivalent to this, and this, accordingly, i^ the 
expression in the other case j and it was held, and I think rightly, to 
have the same effect. Unquestionably the stamp laws are to be strictly 
interpreted, more especially where the penalty of neglecting them, as in 
this case is absolute nullity ; yet I think it must be reckoned too palpable 
an evasion of them to vary so slightly the usual terms of a promissory 
note, and claim exception by merely adopting the form of the documents 
in December, 1825, to which, as vouchers of debt, the same effect must 
be given, as if the usual form of a promissory note had been employed. 

Lord Mackenzie. — I concur in this opinion. 

Lord Pejisident. — I concur in Lord Medwyn's opinion. If it were 
the proper test of any document being a promissory note, that summary 
diligence could follow on it, then a. document might be a promissory note 
in England and not in Scotland, for which the Stamp Act does not give 
any warrant. 

Lord MoNOEEii'i' — I concur in all the substance of this opinion. I 
r *69 1 *^™ ^"^ ^^'^^fi®*^ ^^^^ summary diligence could not proceed on 
L -I documents expressed as the two last of those in question are, if 
they were written on proper stamps. But even though it were to be held 
that from some defect of form or words they could not be taken as 
the warrants of summary diligence, I should still think, that both in 
substance and in form, they are promissory notes in the sense of the 
Stamp Act. 

Lord CoEEHOUSE. — I concur in this opinion, and also Lord Moncreiff's 
addition to it. 



BILIiS OP EXCHANGE. 57 

Lord Gillies I concur in opinion with Lord Corehouse. 

Lord FuLLERTON — In forming the opinion expressed in my note, I 
was chiefly moved by the consideration of the terms of the Act 23 Geo. 
III., c. 18, sec. 25, declaring that promissory notes should pass by in- 
dorsation, and that indorsees of promissory notes should have the same 
privileges as indorsees of bills, in all points ; from which I drew the 
inference that, consequently, in constructing documents, certainly not in 
the usual form of promissory notes, their capability of receiving effect, in 
the terms of the statute, might form a proper test for determining their 
character. But upon a more attentive consideration of the terms of the 
Stamp Acts, and the practice both of Scotland and England, I feel my- 
self obliged to retract that opinion, and to hold it sufficient to bring a 
writing within the operation of the stamp laws applicable to promissory 
notes, that it be a note containing an absolute promise or obligation to 
pay a certain sum of money to a payee, whether " to the bearer on de- 
mand," or in any « other manner than to the bearer on demand." Having 
come to this conclusion, I think it unnecessary to inquire whether or not 
the writings under consideration could be made the ground of summary 
diligence, or could, by indorsation, confer on the indorsees the privileges 
usually attached to that character. But I am inclined to adopt the dis- 
tinction taken between the two descriptions of writings in the opinions of 
Lords Medwyn, Mackenzie, Corehouse, and Monoreiff j and, consequently, 
concur in the general result of those opinions. 

*Lord Justice-Clerk. — The majority of the consulted Judges ^ ^^^ -. 
hold that the first two documents are neither receipts nor pro- L J 
missory notes, and that the other two are promissory notes. I agree, 
and I do not think the test is, whether they can be the foundation of sum- 
mary diligence. 

Lords Glenlee, Ceinqletie, and Meadowbank, concurred. 

The Court accordingly adhered to the Lord Ordinary's interlocutor as 
to the first two, but altered as to the others, and found that they could 
not be stamped. 



1. The case of Fisher v. Leslie, 1 Espinasse, 426, was an action of assumpsit 
for money lent with the common counts. In proof of part of the demand 
claimed by the plaintiff, he produced a slip of paper signed by the defendant, 
and bearing the following words, — "I U eight guineas," and offered this in 
evidence as proof of so much money due by him to the plaintiff. The defend- 
ant objected to it being received, on the ground that it was offered either as a 
promissory note or as a receipt of money, for one or other of which objects it 
was intended to operate, and that in either point of view it required a stamp. 
Chief Justice Byre was of opinion that the document was merely an acknow- 
ledgment of the debt, and neither a promissory note nor a receipt, and admitted 
in evidence. 

2. The case of Israel v. Israel, 1 Camp. 499, was an action of assumpsit for 
money lent, and an account stated. On a settlement of accounts taking place 
between the parties, the defendant, who was son to the plaintiff, gave him an 
unstamped slip of paper, with the following words written upon it in his own 
hand, — "I owe my father four hundred and seventy pounds. Jas. Israel." This 
was offered in evidence as proof of a debt to that amount. The defendant ob- 

■ jected that the document was to be considered either as a promissory note, or as 
a, receipt, and that in neither view was it receivable without a stamp. The plain- 



58 ROSS ON COMMERCIAL LAW. 

tiff contended that it was merely an acknowledgment by the defendant, that 
upon a settlement of accounts such a balance was due- to the plaintifiF, and cited 
the case of Fisher v. Leslie. Lord EUenborough observed, — " I entertained 
r ^H-, -1 some doubts whether this paper ought not to have been stamped, but 
L ' 1 J *upoii the authority of that case I will receive it in evidence though un- 
stamped." " . 

3. By the Stamp Act 55 Geo. IIL, c. 184, certain instruments are declared to 
be deemed and taken to be inland bills, drafts, or orders, for the payment of 
money within the intent and meaning of the schedule of the Act. Among 
these are included, " all bills, drafts, or orders for the payment of. any sum of 
money, out of any particular fund which may or may not be available, or upon 
any condition or contingency which may or may not be performed or happen, 
if the same shall be made payable to the bearer, or to order, or if the same 

■ shall be delivered to the payee or some person on his or her behalf." 

4. The ease of Bmly v. Collins, 6 M. & S. 144, was an assumpsit for money 
had and received. A debtor of the plaintiff addressed a letter to the de- 
fendant, directing him to pay certain .sums to the plaintiff. The letter was in 
the following terms, — "Please to pay to Mr. S. Bmly from and out of the pro- 
duce arising from the sale of my household goods and furniture, and other 
effects, at the Blue Post Inn, Broad Street, Portsmouth, which you are about to 
sell by auction, the sum of £200, and interest thereon from the 23d June last, 
due to Mr. Bmly from me on a warrant of attorney ; and also the further sum of 
£110, Os. Sd., due to the said S. Bmly from me for goods sold; for which said 
several sums of money the receipt of the said S. Bmly shall be your discharge. 
T. Larkman, Nov. 13, 1816." The latter was delivered to the defendant, who 
promised to pay, and the proceeds of the sale were sufficient to pay. It was ob- 
jected that the document ought to have been stamped with an inland bill stamp, 
and Abbott, J. being of that opinion, he directed a nonsuit, with liberty to 
the plaintiff to move. A motion was afterwards made to enter a verdict for the 
plaintiff but refused " Per curiam. This is an order for the payment of money 
out of a particular fund, and does not stipulate for the doing of any collateral 
act. It directs the defendant to pay certain sums out of the fund, and adds, for 
which sums the receipt of Bmly shall be your discharge ; but this is no more 
than what would have followed of course without any words. We should have 
been very glad to have been able to give it effect if we could." 

6. The case of Pirbank v. Bell, 1 B. & Al. 36, was an assumpsit for, money 
had and received, brought by the assignees of a bankrupt, to recover from the 
defendants the produce of a cargo of mahogany, the property of the bankrupt, 
and sold by the defendants for him. The defence was, that the money in ques- 
tion had been paid over by the defendants in pursuance of the bankrupt's 
direction previous to his bankruptcy. In proof of this the following letter from 
the bankrupt was produced, — "Gentlemen, — When the mahogany per Ee- 
r XI72 1 ge°* *'^ ^°^^> y°^ ^^ please pay over to Messrs. Pease & Co. £1500 in 
L -I such bills as you receive from the said sale." A letter from the payees 
to the defendants, and another from them to the payees, were also produced, the 
first of which was stamped with an agreement stamp. The plaintiff objected to 
the first of these letters being read in evidence, it not being stamped as a bill, 
draft, or order for the payment of money. The defendants contended, that the 
three letters constituted an agreement, and that under the Stamp Act where an 
agreement is contained in a series of letters, it is suflacient to have the agree- 
ment stamp affixed to any one of them. Baron Wood, at the trial, thouo-ht the 
stamp sufficient, and a verdict was found for the defendants. A rule for°a new 
trial was afterwards obtained by the plaintiffs in the Court of King's Bench 
Lord Bllenborough observed,— '^ I confess that I feel a difficulty in construing 
this to be an agreement. There is nothing to which the name of an agreement 
can be given if you do not pray in aid the order, that is the onlything by which 
the bankrupt is persouaUy implicated ; for he is not a party to the other letters. 
The order alone affects the bankrupt, and that amounts to nothing more than 
an order for payment. It falls then within the description of the Act of Parlia- 
ment, VIZ., an order for the payment of money out of a fund which may or may 
not be available. It was the object of the Legislature in framing this provi- 



BILLS OI- EXOHANQE. 59 

sion, to treat as promissory notes and bills of exchange, and to subject to a 
stamp duty, such instruments as, being payable on a contingency, or out of a 
particular fund, could not in strictness fall under that denomination. This 
order appears to come as well within the spirit as the letter of the Act of Parlia- 
ment, and therefore ought to have been stamped with the approriate stamp. I 
have wished as much as possible to resist this objection, but I think it cannot 
be got over ; there must therefore be a new trial." 

6. In Scotland, in the case of Laurie v. OgUvy, February 6, 1810, the pur- 
suer brought an action for payment of an account due by the defender to 
another party who had indorsed on the back of it an order in favour of the pur- 
suer in the following terms, — " Pay the within account to Ritchie Laurie." The 
defender resisted, on the ground that the indorsation was not a legal assigna- 
tion, and further, that it was unstamped. Lord Meadowbank, Ordinary, repeEed 
the defence, and observed, — " It seems to me that the indorsement is like a let- 
ter directing payment to a person, servant or factor." The defender having 
reclaimed, the Court adhered, and observed, — " The indorsation is merely an 
authority to the pursuer to settle the account. At the same time it is of such a 
nature as to afford a good action in law. Such an order is not specially in- 
cluded in the descriptions contained in the Acts of *Parliament, and it is r #ijq -i 
not the duty nor within the power of Courts of Law to go beyond the let- 1- ■• 
ter of such statutes." 

7. In Isles V. Gill, June 23, 1836, the document founded upon was in these 
terms, — " Sir, — Pay the bearer the sum of £40 sterling, and charge the same 
egainst my account of wright-work for your house." The defender objected, 
that the letter was essentially a bill of exchange, and being on unstamped 
paper was a nullity. The pursuer contended that it was an assignation of 
the balance of an account, and was precisely similar to the indorsation on the 
back of an account in the case of 'Laurie v. Ogilvy. The Sheriff "found, in re- 
spect of the case of Laurie, 6th February, 1810, that the order or mandate 
founded on was not struck at by the stamp laws." The Lord Ordinary sustained 
the judgment of the Sheriff, but the Court altered and found, that the document 
being unstamped was incapable under the Stamp Acts of founding any action. 
Lord President Hope observed, — "I consider that the letter by IVuncan to Reid 
is essentially a bill of exchange. If it had been simply an order, ' Pay the 
bearer the sum of £40 stsrling, and charge the same against my account,' it 
appears to me that it would indisputable have been, both in form and substance, 
a bill drawn on Reid for £40. But the words, ' of wright-work for your house,' 
are added to those which I have just quoted, and it is said that these essentially 
alter the nature of the draft, I do not think so. I looked on it as a bill, and 
being without a stamp it is of no legal effect. The judgment of the Lord Ordi- 
nary should be altered, and the case sent back to his Lordship with a finding to 
that effect." Lord Balgray. — " The objection to the want of a stamp is one for 
which I have no favour, but if it be well founded the Court must give effect to 
it. I consider it to be well founded, and to be fatal in this case, and that, in 
the meantime, the judgment of the Lord Ordinary must be altered." 

8. In Taylor v. Hutchinson, February 13, 1845, the document founded on 
was in these terms, — " Sir, — In addition to the order by me which you already 
hold to the extent of one hundred pounds in favour of Messrs. William Hutchin- 
son & Company, you will please pay farther to these parties the sum of one 
hundred and sixty-five pounds, or the balance which may be found due me on 
the wright-work of that building situated in Sauchiehall Street, presently finish- 
ing, should the same not amount to these sums, and their discharge will be 
binding on me. I am, Sir, your most obedient servant, (signed) Thomas 
BuoHAN." This letter was addressed to Allan Cuthbertson, and accepted by 
him. He did not dispute his liability, but a competition arose between the 
payees in the order, and another creditor of the gradter, who contended that 
the letter was substantially a bill of exchange, and so required a*stamp. rsir^-i 
Lord Ivory, Ordinary, found, "that the letter of the 20th May, 1842, •- J 
falls within the meaning of the Stamp Act, to be considered as an order 
for the payment of money out of a particular fund which might or might not be 
available, and that having been delivered to the payees named therein, the same 



60 EOSS ON COMMEROIAIi LAW. 

was accordingly liable, as such, to stamp duty : Finds, that the said letter, not 
having been so stamped, cannot be judicially looked at, or received in evidence 
of the alleged transfer or assignment in favour of the respondents of the fund in 
the raiser's hands, more especially in competition virith the diligence used for 
'attaching the said fund by the advocators : Therefore, as in the competition 
between the advocators and respondents, prefers the advocators respectively, 
Imo et Ido loco, in terms of their claims, and decerns." The payee reclaimed, 
and contended that the letter being an order for such balance as might be found 
due to the drawer by the drawee was not an order for a specific sum, which 
was necessary in order to , bring it under the Stamp Act. The Court adhered. 
Lord Jeffrey observed, — " The availableness of the fund contemplated by the 
Statute may either be in whole or in part. The fact of its not being available 
for amount specified, makes no difference in the stamp duty, which must be for 
the amount nominated in the bill, the letter here, by providing that, though the 
fund is not available for the whole amount, it shall be paid whatever it is, just 
gives needless expression to what the Statute contemplates — ^that the order shaU 
only be available to the extent of the fund in hand. I don't think the objection is 
maintainable." Lord FuUerton observed, — " The point is, Whether this writing 
truly falls within the description of the schedule of the Stamp Act ? And I 
agree with' Lord Jeffrey that it does. It is not an order to pay an uncertain or 
indeterminate sum. The sum to be paid is definite, though the amount ulti- 
mately-recoverable on it might fall Short in consequence of the balance, out of 
which it was to be paid, not affording the full payment. The uncertainty of the 
, payment arises not from any indefinitiveness of the sum ordered to be paid, but 
from the uncertain amount of the fund out of which it was to be paid ; and I 
think it clear, both from the words of the schedule, and from the construction 
put upon them by the English decisions, that these are just the circumstances 
which it was intended to provide for in the a'rticle of the schedule alluded to." 

9. The case of Taylor v. Scott, July 16, 1847, was an action for payment of 
certain accounts, each of which was indorsed to the pursuers by the parties in 
right of them in the following terms, — " Portsea, 20th Nov. 1844. Pay the 

, above, and interest thereon, for value, to Mr. Thomas Eodgers Taylor, Solicitor." 
The defender pleaded, Uiat the pursuer had no title to sue, on the ground- that 
r *75 1 *^® indorsations founded on were not valid or lawful *tra,nsferences of 
•■ J the accounts by the law of England, in which country they were made. 
A remit having been made for the opinion of English Counsel, the following 
opinion was returned by the Attorney General Jervis and Mr. BetheU, ^"Ac- 
cording to the law of England the documents in question are not valid transfers 

'of the claims or demands, nor would they enable Mr. Taylor to sue in England, 
either at law or in equity, for the recovery thereof. The claims in question are , 
what the English law denominates choses in action, and which at law are inca- ' 
pable of being made the subject of any transfer or assignment. In equity, 

' however, choses in action are capable of being assigned, but the orders delivered 
to Mr. Taylor, and on which he sues, would not be. regarded by a Court of 
Equity in England as amounting to assignments ; and we think it plain that an 
English Court of Equity would be bound to hold such orders to be absolutely 
void, as amounting to inland bills of exchange, within the meaning of the 65 
Geo. III., c. 184, by the schedule to which act it is provided, (under the head of 
'Inland Bills of Exchange,') that ' order for payment of any sum of money 
though not made payable to the bearer of the order, if the same shall be de- 
livered to the payee,' shall bear the same duty as on bills of exchange • and as 
by the 11th section a penalty is attached to the issuing of such instruments 
unstamped, no stamp can be afterwards affixed to them, and the objection does 
not admit of them being removed. The Court thereafter sustained the defence 
of want of title, and dismissed the action. 

10. The case of Sutherland v. Monro, November 13, 1847, was very simUar 
to that of Laurie v. Ogilvy. The pursuer sued for payment of an account due 
by the defender to another party, who at the foot of the account wrote an order 
in favour of the pursuer in the following terms,—" Pay the above sum of £— and 
interest to Donald Sutherland." It was objected on the part of the defender 
that the assignation to the pursuer was invalid for want of a stamp. The pur- 



BILLS OF EXCHANGE. 61 

suer contended that the case of Laurie v. Ogilyy settled the question, as to the 
validity of such indorsations of open accounts ; that they were not properly as- 
signations, but merely mandates, ordering the debtor to pay the creditor's man- 
datory ; that as such they required no stamp, and that the practice of the country 
had, moreover, gone on the case of Laurie. The Court found, that in respect 
the documehts Founded on are not stamped, they cannot be made the ground of 
action in a court of law. Lord President Boyle. — " I would be unwilling to dis- 
turb the law laid down in Laurie v. Ogilvy ; but I am unable to get over the 
later case of Isles v. GiU. The present falls under the latter case, and must be 
treated as a bill requiring a stamp." Lord Mackenzie. — " This is not exactly a 
bill of exchange, for there is no *exchange in the matter. It is an as- r«j7/.-i 
signation ; and if so, it equally requires a stamp. It is said, however, to-'- ' 
be a mandate, and requires no stamp. That, however, is contrary to the fact 
here, for Sutherland sues for his own interest as ' indorsee' of the parties who 
order their accounts to be paid to him. They have sold their rights to him ; and 
he does not claim payment for them." Lord Jeffrey. — " I am of the same opin- 
ion. The objection is not a favourable one, but we cannot shut our eyes to the 
stringent provision of the Stamp Act, nor to the fact, that in England a docu- 
ment of this kind would require a stamp. It is an order to pay a sum of money, 
and the Stamp Act imposes a stamp upon ' an order for the payment of any 
sum of money, though not made payable to the bearer or to order, if the same 
shall be delivered to the payee, or some person on his or her behalf.' " 



A BILL OP EXCHANGE MADE PAYABLE TO A FICTITIOtTS PABTT IS HELD 
TO BE MADE PAYABLE TO THE BEAEER IN ALL QUESTIONS BETWEEN 
AN INNOCENT HOLDER AND A PERSON COGNIZANT Or THE FICTION. 

MINET V. GIBSON. 
Feb. 14, 1T91.— E. 3 T. E. 481. 1 H. Bl. 569. 

This was an action on a bill of exchange brought by the indorser 
against the acceptors. The bill was in these terms: "Three months 
after date pay to Mr. John White, or order, £721, 5s., value received, 
with or without advice." It was signed by Livesey, Hargreave, and Co., 
and addressed to Messrs. Gibson and Johnson, bankers, London. 

No such person as John White existed, and the fifth count in the de- 
claration stated that the bill was made payable to bearer, and that the 
plaintiffs were the bearers. 

A special verdict was agreed to be put upon record, for the purpose of 
having the question finally decided in the House of Lords. The verdict 
stated that Livesey and Co. made a certain instrument in writing directed 
to the defendants, requiring them, three months after date, td pay to John 
White, or order, dS721,'5s.; that Livesey and Co. at the time of making 
it, well *knew. that no such person as J. White, in the bill men- p ,„-. _ 
tioned, existed ; that a certain indorsement in writing was after- L J 
wards made by Livesey and Co., purporting to be the indorsement of J. 
White, and requiring the contents of the bill to be paid to Livesey and 
Co., or to their order ; that'Livesey and Co. afterwards indorsed (by A. 
Goodrich, by procuration of Livesey and Co.) to the plaintiffs, for a full 
and valuable consideration, when the plaintiffs became, and still are, the 
holders of the bill; that the defendants afterward accepted, well know- 

Apail, 1854. — 5 



62 KOSSONOOMMEROIAIiLAW. 

ing that no such person as J. White, in the bill named, existed, and that 
the name of J. White so indorsed thereon was not the handwriting of 
any person of that name. That the defendants, at the tinie of the mak- 
ing and accepting the hill, had not, nor had they at any time since, any 
money, goods, or effects whatsoever, of or belonging to Livesey and Co., 
or of the plaintiffs, in their hands. And that the defendants have not 
paid the bill, (although often required.) But whether upon the whole 
matter the defendants are held, &c., the jurors are ignorant, and pray the 
advice of the Court. 

On this special verdict the Court of King's Bench gave judgment for 
the plaintiffs upon the fifth count of the declaration. Upon this judg- 
ment a writ of error was brought, and the judgment was sought to be 
reversed for the following reasons : — 

First, Because by the law and custom of merchants there are two 
species of negotiable instruments or bills of exchange, essentially differ- 
ent in their natures, the one payable to order, and the other to bearer ; 
the former being only negotiable by indorsement, and the property in 
the latter being transferable by mere delivery. 

Second, Because instruments of this description are in the nature of 
specialties, and are by law permitted to be declared upon as such j and 
the count upon which the Court have given judgment, setting forth and 
stating a bill payable to bearer, when the bill or instrument produced in 
evidence purports to be a bill payable to order, is not supported by the 
evidence. 

Third, Because the legal effect of every instrument must arise out of, 
r*781 ^^^ ^® collected from the words of it, and no parol *evidence or 
L J ectrinsio circumstances can give it a meaning or operation con- 
trary to, or different from, that which appears on the face of the instru- 
ment itself. 

Fourth, Because in the case of instruments, the property of which 
passes by indorsement, it is peculiarly necessary that there should be per- 
sons in existence answering to the names indorsed upon such instruments, 
inasmuch as additional credit is derived to them from the number of in- 
dorsements made upon them, the consequent appearance of their having 
passed through an extensive circulation, and the apparent liability there- 
fore of a greater number of persons to the payment of the money con- 
tained in them. 

Fifth, Because the facts found by the jury amount to the statement of 
a fraud and forgery, which can never give legal effect to an instrument, 
nor be the foundation of a contract within the custom of merchants ; 
which custom must be founded in convenience, be consistent with reason, 
and sanctioned by usage ; and, consequently, as the count on which the 
judgment for the defendants in error is given, declares on a bill drawn 
according to the usage and custom of merchants, the evidence does not 
support such declaration. 

Sixth, Because judgment being given for the plaintiffs in error, on 
those counts which specially state circumstances that have been found by 
the jury, it follows that they are entitled to it on that count, to the sup- 
port of which the facts so found are the only evidence; otherwise it must 



BIIil-SOPEXCHANaE. 63 

be decided, that a transaction, which stated upon the record in an action 
upon the case, is not sufficient to found a contract, or to make the party 
charged liable, will, when found specially by a jury, and put upon the 
record in the shape of a special verdict, be sufficient to found a contract, 
and to support a count stating a contract of a different nature. 

The judgment was sought by the defendant to be affirmed, for the fol- 
lowing reasons : — First, It appears by the special verdict that the defend- 
ants in error are fair bonS, fide holders of the bill in question, for a valu- 
able consideration ; and Livesey, Hargreave, and Co., the drawers, at the 
time when they drew the bill, as well as the plaintiffs in error, Messrs. 
Gibson and *Johnson, when they accepted it, are found to have ^ ^^(. -. 
been perfectly informed of the non-existence of White, to whom, I- J 
or to whose order, the form of the bill makes the contents of it payable. 
The defendants in error, therefore, are in a situation which entitles them 
to all the aid which, consistently with established legal principles, can 
be given by a court of justice. And the plaintiffs in error having acted 
under no mistake or misrepresentation, and not being in any respect in- 
terested in the existence or non-existence of White, have no equitable 
claim to be released from the effect of their engagement, or to prevent 
the application of any favourable rule of construction to support the de- 
mand of the defendants in error. 

Second, It is not necessary to the validity of deeds or contracts, that 
they can in all cases operate according to the words in which they are 
expressed : when the rules of law prevent such operation, the instrument 
may legally operate in a different manner, to give effect to the legal in- 
tent of contracting parties. Thus, words of demise may operate by way 
of cpnfirmation, and vice versa; words of grant by way of covenant; and 
so in many similar instances. The intent of the drawers and acceptors 
of the bill in question, was to make a negotiable instrument, and if for 
want of an actually existing payee, nominated in the bill, it could not be 
so indorsed as to be put into a state of negotiability by indorsement, it is 
humbly conceived that there is no rule of law to prevent its being trans- 
ferred by delivery, and having the effect of a bill expressed to be made 
payable to bearer, that being the only other method of negotiating bills 
of exchange : and it is also conceived that the fifth count of the declara- 
tion, which states the bill according to its legal effect and operation, is 
properly adapted to the case, and that the judgment thereon is warranted 
by the verdict. By thus giving effect to the bill, justice is done betwixt 
the parties, and the rule affords protection to the fair holder of bills of 
exchange against frauds, by which they might otherwise be injured; 
without which protection the currency of bills of exchange would be 
greatly obstructed, and great inconveniences would arise in commercial 
transactions. 

Third, It is objected, that the defendant in error make title *to |- ^^n -i 
the bill through the medium of a felony ; but supposing the in- L ^ 
dorsement of the name of White to have been a felonious act, the present 
action is not brought against the person who committed the felony, or 
for the felonious act; and it has been decided. Peacock v. Khodes, Dougl. 
632, that the bonS. fide holder of a stolen bill of exchange might maintain 



64 KOSSONOOMMEROIALLAW. 

an action upon the bill, though it had been negotiated to him through 
the hands of the person who stole it. In the present case, however, the 
question does not arise ; for the verdict finds no intent to defraud, and 
consequently no felony is found, nor can be intended. 

The case having been argued at the bar of the House of Lords, the 
following questions were put to the judges : 

I. Whether the making of the instrument declared upon appears upon 
the special verdict to be so criminal that the policy of the law will not 
suffer an action to be founded on such an instrument? 

II. Whether, upon the matter found in the special verdict, the bill 
mentioned in the fifth count can be deemed in law a bill payable to 
bearer ? 

III. Whether the matter of the special verdict will sustain any other 
count in the declaration ? 

On the 3d of February, 1791, the judges delivered their opinions. 

HoTHAM, Baron : — With regard to the second question, " Whether^ 
upon the matter found in the special verdict, the bill mentioned in the 
fifth count can be deemed in law a bill payable to bearer ?" it is impos- 
sible to lay out of the case any of the facts stated in the declaration, and 
found by the special verdict ; the answer to this question must embrace 
them all. It is equally impossible not to feel that the plaintiffs in error 
avow themselves to be in this situation, namely, of palpably endeavour- 
ing to avail themselves of their own fraud ; an attempt which the law 
will in no case endure, much less assist. Unless, therefore, some stub- 
born rule of law stand in the way of the present judgment of the Court 
P j^Q. -. of King's Bench, it ought *to be supported ; and I am of opinion 
L J that no such rule does impeach it. It is admitted that many 
cases may be put, such as are mentioned in Co. Lit. 45 a, and in many 
other books, in which deeds and solemn instruments are not always to be 
construed or to have effect according to their technical or literal import, 
but that they shall have such an operation as will carry the intent of the 
parties into execution, though contrary to the strict letter of the instru- 
ments themselves. That principle will, in my apprehension, apply 
directly to the present case. The bill in question, on the face of it, 
imports to be a bill of exchange payable to John White or his order ; but 
in truth, and in fact, it is not so, it never was, nor ever can be so, be- 
cause there is no such person existing as John White, which is found to 
be a fact known to the acceptors as well as to the drawers. Is then the 
bill so vitiated as (contrary to the principle which operates on deeds and 
other instruments) to lose all its efficacy and become mere waste paper ? 
To answer that question we must resort to what the law never overlooks, 
the intention of the parties, which in the present case was clearly other- 
wise. The plaintiffs in error, as well as Livesey and Co., meant to give 
the bill a credit by the acceptance, and to put it into circulation ; and 
they all thought the most convenient way of doing it was by inserting in 
it this fictitious name. It having been found, then, that the plaintiffs in 
error knew at the time of their acceptance that the name of John White 
was a mere fiction, they must be presumed to have known more, namely, 
that no regular or formal title could ever be traced through him by any 



BltLS OF EXCHANGE. 65 

holder of the hill. If, therefore, they have accepted a hill which they 
knew was so framed as to he incapahle of being proved in the shape it 
bore, they shall nevertheless be held to their undertaking to pay it, 
though it be presented to them in another, because they themselves have 
induced such necessity ; for it is a known rule of law, that no man shall 
take advantage of his own wrong; 

Nee lex est jnatior uUa, 

Qu^m necis artifices arte perire sa&. 

It is impossible not to consider the drawers and acceptors here as one 
and the same, linked together for the purpose of *giviiig colour _ „„„ _ 
and effect to this fraudulent transaction. The difficulty on the L ""^ J 
form of the bill arises from no mistake or accident, hut from the delibe- 
rate and concerted act of the acceptors as well as the drawers. But it is 
still in their power to give effect to the bill ; shall they not then be 
obliged to do so ? Perhaps it may not be too much to say, that on this 
finding a presumption will arise that the intention of the acceptors was, 
that it should be payable to the bearer ; for they knew that the bill, 
virtually, had no indorsement upon it by John White ; they knew that 
it came into the hands of Minet and Pector by the delivery of Livesey 
and Co., and that in truth, whatever semblance it bore, it was nothing 
but a bill payable to bearer. I contend that it is not competent to these 
partners in the fraud to say, " It is true we did accept the bill, but we 
meant nothing, by that acceptance, but to cheat all mankind, let the bill 
get into what hands it might. As little shall they be permitted to say, 
after having fabricated this paper, that it is not according to the law and 
custom of merchants, which I conceive will attach on the bill, notwith- 
standing the fraud used in its original formation. The great principle 
that I go upon is, that parties to a bill shall not, any more than parties 
to any deed or instrument, take advantage of their own fraud. In truth, 
what is the end and effect of acceptance but a liability to pay ? The 
acceptors having given this bill a currency when they knew that it never 
could be paid to the order of White, the law will presume that they in- 
tended that formality should be waived. If it be waived, what does it 
remain but a bill payable to bearer ? Knowing that it was impossible 
to pay it in the shape it bore, they accepted it, but knowing at the same 
time that it was possible to pay it in another. The law will conclude 
then that such was their intent ; and I conceive that such a construction 
will be most conformable to the policy which affects, and the principles 
which operate on, all commercial transactions. That policy and those 
principles are bottomed in liberality. Bargains shall be enforced, under- 
takings shall be executed, and promises to pay shall be performed. The 
rule of law, that a man's own acts shall be taken most strongly against 
himself, obtains not only in grants, but extends in principle to all other 
♦engagements and undertakings. I conceive, therefore, that the ^ ^qo , 
acceptors of this bill shall not be heard to say in a court of jus- L J 
tice, that as they never intended to pay it, so because they have inserted 
White's name in it they never shall be compelled to pay it. On the 
contrary, the law will hold them more strictly to a compliance with their 



66 BOSS ON COMMERCIAL LAW. 

engagement, on the single ground of their own fraud, and will therefore 
still consider the bill as capable of transfer by delivery. A bill of ex- 
change, in its own nature, amounts to nothing more than an authority, 
on one hand, to pay to the order of the person to whom it is made pay- 
able, and, on the other, to an undertaking on the part of the acceptor 
that he will pay it. By his acceptance he puts himself into a situation 
that makes it obligatory on him to pay the bill, either in the very terms 
of it, or as nearly as possible to its literal import; and as soon as he has 
made himself the principal debtor for the sum contained in it, the law 
raises a presumption against him. But the presumption here cannot be 
that the acceptors will pay it to the order of White, because the fact 
found makes that to be impossible, and impossible in their own know- 
ledge. The name of John White, then, must be considered as if it were 
not on the bill at all, as no name, as a mere nonentity. To whom then 
must the presumption arise that it was intended to be payable, but to 
the only person it could, namely, to the bearer ? And I am of opinion 
that the great ends of circulation, the support of credit, and the exten- 
sion of commerce, would be in constant danger of fatal checks, if bills 
were permitted to be so made as to enable confederate acceptors to set 
up their own fraud, as a justification for refusing payment to a fair and 
honest holder of them for a bonS, fide valuable consideration, which these 
defendants are found to have given. On this question, therefore, I am 
of opinion, that upon the matter found in the special verdict, the bill 
mentioned in the fifth count may be deemed a bill payable to bearer. 

Perrtn, Baron. — As to the second question, viz., " Whether upon the 
matter found in the special verdict, the bill mentioned in the fifth count 
can be deemed in law a bill payable to bearer ?" these facts appear in the 
r *84 1 ^P^"'^'- ^^'■'^i*'' > '"•*' the *name of John White indorsed on the 
L J bill was done by the drawers previous to the receiving the full 
value from the defendants in error; that Gribson and Johnson afterwards, 
■with full knowledge that John White was a nonentity, and that no person 
with that name had indorsed the bill, accepted it. This circumstance 
being known to the acceptors, there was no imposition upon them, they 
have, with their eyes open, ratified and confirmed the acts of the drawers, 
guaranteed the payment of the bill, and undertaken to discharge it. In 
the case of drawing bills of exchange to the order of a fictitious payee, 
the drawer and acceptor, knowing the fact, have no reason to complain 
of any injury to them. The acceptor, either upon the credit, or for the 
honour of the drawer, engages to pay the bill when due, and can never 
be discharged from that engagement except by satisfying the bill, which 
if he once does to the bona fide holder, he can run no risk of any claim 
from a fictitious payee. Every person whose real name and signature 
appears on a bill of exchange, is responsible to the extent of the credit 
he gives to it in the negotiation of it. It is contrary to justice, and not 
to be endured, that fraudulent drawers and acceptors should receive bene- 
fit by their own acts, and their estates be exonerated from the demands 
of their just creditors. The claim of the defendants in error certainly 
injustice and equity ought to be supported, and I think it may in law 
be maintained upon the fifth count, as on a bill payable to bearer The 



BILLS OP EXCHANGE. 67 

intent of the drawers and acceptors of the bill seems to be, to have 
made a negotiable instrument; and if for any defect, it cannot be 
made so by indorsement, it is reasonable it should be made valid in any 
way in which that effect can be produced : and there does not occur to 
me any rule of law to prevent its being tuade good by delivery. If a 
bill be made payable to a person not existing, it operates as a bill pay- 
able to bearer. Where the bill is in the hands of a purchaser for a full 
and valuable consideration bona fide, and the acceptor, before his accept- 
ance, is privy to the non-existence of the payee, and who cannot give an 
order, it is in effect and in point of law the same thing as if made payable 
to the holder, namely, the bearer. Many instruments may be enforced 
contrary to the words, *Co. Litt. 45 a, 301 b; words of demise r»oK-i 
operate as a grant, covenant to stand seised, confirmation, and in ■- -J 
other ways : at one time they may operate as a lease, at another time as 
a confirmation, in order to preserve right and do justice, the law being 
anxious and astute to obtain those purposes. In the case of Stone v. 
Freeland, cited 3 Term Kep. B. R. 176, Lord Mansfield said, in bills of 
exchange names of payees were often used of persons not having exist- 
ence, and such bills indorsed by the drawer ; and if with knowledge of 
that fact a bill is accepted and put in circulation, it shall not lie in the 
acceptor's mouth to say the bill is a bad one. And in that case Lord 
Mansfield held that the acceptor was liable, though there was a fictitious 
payee, and that such acceptor should not be at liberty to deny the vali- 
dity of the bill, which, by lending his acceptance, he had put in circula- 
tion. In Peacock v. Ehodes, Doug. 632, Lord Mansfield, in giving the 
opinion of the Court, said — " The law was settled, that the holder of a 
bill coming fairly by it, has nothing to do with the transaction between 
the original parties, except in the single case of a note for money won at 
play." Price v. Neale, 3 Burr. 1354, was the case of a forged bill, 
which had been accepted and paid to the defendant in the course of 
trade ; there Lord Mansfield held, that the acceptor having given credit 
to it by his acceptance, should not recover back what he had paid to a 
bonS, fide holder. In Collis v. Emmett, Term Rep., C. P. 313, where a 
bill was made payable to a fictitious payee or order, it was holden that 
the indorsee might maintain an action against the drawer, as on a bill 
payable to bearer. Under the circumstances stated in this special ver- 
dict, I see no distinction that can be made between the drawer and accep- 
tor of such bill. The bill indeed in this case, as in Collis v. Emmett, is 
payable to John White or order, but before the plaintiffs in error accept- 
ed it, they knew that John White was not in existence, and could not 
make an order : the indorsees, ignorant of that fact, pay a full value for 
the bill ; the acceptors have, by lending their name, given circulation to 
the bill, and have, as I conceive, undertaken to pay the bill to such per- 
son as shall be the bonS, fide holder : their engagement is to pay the bill 
in any way in which it can take effect. Upon #the whole, there- p ^r,„ -. 
fore, I concur with the judgment of both the Courts of King's L -' 
Bench and Common Pleas, and my answer to the second question is, 
that upon the matter found in the special verdict, the bill mentioned in 
the fifth count may be deemed in law a bill payable to bearer. 



68 BOSS ON COMMEEOIAIi LAW. 

Thompson, Baron. — It is next to be considered whether this action can 
be maintained on the fifth count of the declaration., which treats the bill 
as payable to the bearer, and deduces a title to the plaintiffs in the action ia 
that character J on which count judgment has been given for them by the 
Court of King!s Bench. To consider the bill in question as a bill pay- 
able to bewer, is undouttedly to treat it as an instrument in a different 
form from that in which it appears ; and yet it is certain that the bill is 
not in reality whfit it imports to be. The construction which has. been 
put upon this instrument by the court below, is that which will give 
effect to it, and compel the defendants there to do what in justice they 
are tound to do, viz., to make good the engagement they entered into 
by accepting the bill ; viz., to pay the amount of it. In order to support 
this construction, recourse must be had to the facts disclosed by the 
special verdict ; and there it appears that Livesey and Co. when they 
made, and Gribsop and Johnson when they accepted the bill, knew that 
there wd;s no such person as John White, the supposed payee of the bill, 
in existence to receive the money, or authorize any other person by in- 
dorsement to receive it, and that the bill was incapable of being nego- 
tiated in that form. But it was meant to be a negotiable bill of ex- 
change, and has actually been delivered for a valuable consideration ; and 
therefore to give effect to it, and to what we must take to be the inten- 
tion of the parties, it seems requisite to construe it (as between those 
parties) a bill payable to bearer,- and consequently assignable by the de- 
livery which has taken place. It is clear, (as was said by the Court of 
King's Bench in giving judgment in the case of Tatlock v. Harris, in 
Easter Term, 1789,) that many instruments may be enforced contrary to 
the wording of them; as if B. tenant for the life of C, and he in re- 
mainder or reversion in fee having several estates in the same lands, join 
r *87 T ^^ ^^^ ^^™^ ^^^^s ^y *deeA ; during the life of C. it shall be con- 
L J sidered as the lease of B., and confirmation of him in reversion 
or remainder, and after the death of C. it is the lease of the remainder^ 
man, and the confirmation of B., according to Co. Lit. 45 a. The case 
of Collis V. Emmett, detergained by the Court of Common. Pleas in Hilary 
Term, 1790, which is reported in the Term Eeports of that Court, and 
which has been referred to in the argument, appears to have been decid- 
ed on the same principle with the present case.' There the defendant 
wrote his name on a blank paper, and delivered ,it to Livesey and Co, for 
the purpose of drawing a bill of exchange for such sum, and-payable to 
SBoh person as they should think fit. Livesey and Co. drew a bill on 
the paper over tlie defendant's name for ^£1551 upon themselves, payable 
to GreoTge Chapman or order, which a clerk of Livesey and Co. accepted 
for them ; and with the authority of Livesey and Co. the name of George 
Chapman was indorsed upon the paper. This bill was then delivered for 
g, v?iluable consideration to a person on behalf of one Jeffrey, who nego- 
tiated it with the plaintiffs : there was no such person as Chapman the 
supposed payee. In an action brought by the plaintiffs against Emmett 
as the drawer of the bill, the Court held upon a special verdict that the 
plaintiffs might recover against him as the drawer of a bill payable to 
bearer, on a count to that effect. Upon the whole, therefore, I conceive, 



BILLS OP EXCHANGE. 69 

on this special verdict, that the bill mentioned in the fifth count may be 
deemed in law a bill payable to bearer. 

Gould, J. — The next consideration is, whether the ground taken by 
the Court of King's Bench to construe it to be a bill under the circum- 
stances of the case payable to bearer, is right, ut res magis valeat quam 
pereat; whether when it is impossible for the instrument to operate 
literally, the equity of the law will not put such a sense upon it as 
will answer the intention of the parties and give it effect. It would 
be enough to say to give it effect to the innocent party, but I do not 
hesitate to speak plurally, the intention of the parties, since it appears 
that both drawers and acceptors knew it could not have effect literally 
in the form in which it was fabricated, and as I have already observed, 
the law will not endure that they should *allege that their p ^r.a -i 
intention was fraudulent ; for allegans auam tv/rpitudinem non L J 
est audiendus. It is a rule of law, that every instrument shall be con- 
strued in the most forcible manner against the maker. The argument 
then results to this : it was in the power of the drawers and acceptors 
(for it is evident they acted in concert) to have framed the bill to be 
payable to a real person or order, or to bearer, and in either case it 
would have been effectual to charge the drawers, and after acceptance 
the drawees. But they do not choose to take the first course j and it 
is highly probable (I might say apparent) that the reason was, they knew 
that no substantial payee would indorse the bill, and so their purpose 
in that form would be defeated. They therefore resort to an elusory 
form, which could not in that shape have any force or effect. It 
remains then that it should be construed that they meant the bill should 
be payable to bearer, as being the only way in which, in its original 
formation, it could take effect and oblige them as a bill of exchange. 
No violence is done ; it follovrs and enforces what must be presumed to 
be their intention, the payment to the person justly entitled to the money. 
No inconvenience can ensue, because by the satisfaction of the bill all 
farther circulation of it is at an end. For these reasons I am of opinion, 
that the Conrt of King's Bench had sufficient foundation to decide for 
the plaintiffs on the fifth count. 

Lord Chief Baron Eyre. — Upon this record three questions are made; 
the last is in substance, whether this special verdict will sustain any one 
of the ten counts in the declaration, except the fifth ? In order to narrow 
this question, and to introduce what appears to me to be the real point, 
it may be proper to observe in this place, that five of the ten counts in* 
the declaration, namely, the third, seventh, eighth, ninth, and tenth, 
seem to be laid out of the case by the special verdict. The bill is not 
made payable to Livesey, Hargreave, and Co. by the name of John 
White, which is stated in the third count; nor is it made payable to them 
by the medium stated in the seventh count, that there was a partnership 
trading in both firms ; and the fact found, that the acceptors had no money 
in their hands either of the drawers or of the plaintiffs, seems to exclude 
*the three last counts. As to those three last counts it is to be ^ ^on -i 
observed, in addition to the effect of the finding in the negative, L J 
that if there had been no such negative finding, still the special verdict 



70 KOSSONODMMEROIALLAW. 

• 

would not have supported those counts, the finding amounting at best to 
nothing more than evidence of the fact of money had and received, which, 
according to the rules which govern the application of special verdicts to 
the matters in issue, is always deemed an insufficient finding. I have 
said that I object to the three last counts, one of which is for money 
paid, &o., that they are not found. I go farther, and say that the evi- 
dence which might have supported either of those counts is not found, 
and particularly the evidence which might have supported the count for 
money paid, &c. The theory of a bill of exchange is, that the bill is an 
assignment to the payee of a debt due from the acceptor to the drawer, 
and that acceptance imports that the acceptor is a debtor to the drawer, 
or at least has the effects of the drawer's in his hands. But in an action 
wherein the declaration is 4ipon the bill itself, creating a duty by the 
custom of merchants, this is all out of the case. In any other action of 
assumpsit at common law founded upon a bill of exchange, the bill is 
offered as evidence only of the duty. It has been expressly determined 
that a general indebitatus assumpsit will not lie upon a bill of exchange j 
but the indebitatus must be for some duty, such as money lent, &c., and 
the bill is offered as evidence of that duty. Now, when it is offered as 
evidence of the duty, it is but evidence ; and any of the presumptions . 
which the writing affords may be contradicted by evidence, and from the 
whole of the evidence the jury must draw the conclusion of fact that so 
much money was lent, so much had and received, &c. The presumptions 
of evidence which the writing affords, have no application to the assumpsit 
for money paid by the payee or holder of a bill to the use of the acceptor : 
it must be a very special case which will support such an assumpsit. I 
can conceive a case, in which an acceptance might be evidence of money 
paid by the payee to the use of the acceptor. I may borrow of one man 
to lend to another, and if the person of whom I borrow the money pays 
it by my order into the hands of him to whom I mean to lend it, this 
might be a ground upon which a jury might find that the money was 

r*901 *^^^^ '° "•^ "^®" ■^ ^^^^ °^ exchange may be the medium by 
L J which I, the acceptor, borrow the amount of the bill of the payee 
to lend to the drawer j and when the payee, with the privity of me, the 
acceptor, and at my request, pays to the drawer the amount of the bill, 
the money so paid may be said to be paid to the drawer to the use of me 
the acceptor. But upon this special verdict neither the fact nor th? evi- 
dence of the fact is found. The payee's money is not found to have been 
advanced to the drawer at the request of the acceptor, with his privity, 
or with any sort of communication with him. No man will deny that 
before the acceptance it was a loan to the drawer, for which the drawer 
was debtor to the payee. The mere acceptance, without any communi- 
cation of the circumstances attending that loan, could not alter the nature 
of the acceptor's engagement, nor amount to a ratification of anything 
which had passed between the drawer and the payee, nor charge the 
acceptor beyond the ordinary effect of his acceptance. 

But farther, ratification supposes something which may be ratified ■ 
but there is nothing found by this special verdict to have passed between 
the drawer and the payee, in any manner involving the acceptor, or which 



BILLS OF EXCHANGE. 71 

the acceptor could ratify. "We are not first to presume a transaction 
between the drawer and payee, which would charge the acceptor, and then 
make his acceptance a ratification of that transaction. There are only 
two facts stated which in any manner concern the acceptor. He had no 
effects in his hands of the drawer's, and he knew that the payee was ficti- 
tious. The acceptance, the acceptor having in fact no effects in his hands, 
approaches nearer to an undertaking for the debt of another which had 
been previously contracted, than to any other species of contract at the 
common law. The acceptor's knowledge that the payee was fictitious may 
infect the contract he has entered into with fraud, but cannot alter the 
nature of the contract itself. I remain therefore of opinion that the 
three last counts, which are general indebitatus assumpsit for duties, 
cannot be supported by this special verdict. And upon the discussion of 
the question, it appears to me that the argument is more conclusively 
against the ninth count, for money paid to the use of the acceptor, than 
against the others. 

*The fourth count, which is in the common form of declaring j., „, -. 
by an indorsee of an inland bill of exchange against the acceptor, L J 
and supposing the original payee to have indorsed immediately to him, 
' striking out the intermediate indorsements, must also be laid out of the 
case, because in the first place there is an intermediate indorsement found, 
and in the next place it is found that the original payee did not indorse 
to any body. 

The general question upon the matter found in the special verdict, 
will then be reduced to this question. Whether the matter of the special 
verdict will support any one of the four remaining counts, viz., the first, 
second, fifth, or sixth ? 

There is a preliminary question, viz., " Whether the making of the 
instrument declared upon, appears upon the special verdict to be so crim- 
inal that the policy of the law will not suflFer an action to be founded 
upon such an instrument ?" which will be disposed of by observing, that 
(although the transaction stated in the special verdict appears to be of a 
very criminal nature, perhaps suflicient to have warranted a charge - of 
forgery against both the drawers and accepters of this bill, and also to 
have warranted the finding of all that is necessary to constitute the crime 
of forgery, in both) the crime does not appear upon this special verdict 
so constituted. There is no fraudulent intention found, which is of 
the essence of the crime; consequently, the question whether the policy 
of the law would suffer an action to be founded upon the crime, does not 
arise. Upon this question there is no difference of opinion, and there- 
fore I forbear troubling the house with any particular discussion of it ; 
and I return to the question. Whether the special verdict will support 
any, and which of the four counts before enumerated, viz., the first, 
second, fifth, or sixth, which will include all that remains to be answered 
of the second and third questions proposed to the Judges ? 

And upon the first view of the case, and comparing the facts stated in 
the special verdict with the state of the plaintiff's case in his first count, 
they tally so exactly, that I am obliged to acknowledge that the matter 
in this special verdict is a direct proof of the fact stated in this count : 



72 ROSS ON COMMEROIAI. IiAW. 

and one miglit have expeoted, that the plaintiff would have had judg^ 
ment upon that count in his favour if on any. I agree likewise that the 
special *verdiot finds all the material facts upon which the second 
t J and sixth counts proceed. It is a mere conclusion of law from 
the faotSj that in the first and second counts, by reason of the pre- 
mises, the acceptor became liable to pay the contents of the bill to the 
plaintiff; and in the sixth count, that by reason of there being no such 
person as John White, the contents of the bill became payable to the 
bearer. The real question, therefore, with regard to those three counts 
is, not whether the facts found will sustain them, but whether the counts 
themselves are suflScient in law to maintain the plaintiffs' action ? Why 
was not the judgment taken upon one or the other of these three counts ? 
I can imagine but one reason, namely, that the plaintiffs did not dare to , 
risk their judgment upon either of them, supposing that they entered up 
the judgment at their peril ; or if it was the deliberate act of the Court, 
that the Court were of opinion that neither of those three counts could 
be sustained in point of law. I do humbly conceive, that they cannot 
be sustained in point of law, and that this will be n^aterial to the argu- 
ment upon the second question which applies to the fifth count, I may 
say decisive of it. For if it be not a just conclusion of law in the sixth ' 
count, that by reason of the bill being made payable to a fictitious payee, 
the contents of the bill became payable to the bearer, I apprehend it will 
be extremely difficult to find any other ground in law, upon which the 
bill mentioned in the fifth count can be deemed in law a bill payable to 
bearer : and I ne'ed not observe that the plaintiffs have nothing but a 
conclusion of law to rely upon, for maintaining this fifth count; the 
mere fact found by the special verdict being in direct opposition to the 
fact stated in the fifth count. 

I shall make a few introductory observations, which I apprehend will 
apply to all these counts. And first I observe, that the questions which 
arise upon this record are questions which relate to the plaintiff's decla- 
ration, and not to the defendant's plea; to the plaintiff's title to sue, and 
not to the defence set up against that title. I presume it must be ad- 
mitted to me, that a plaintiff who sues upon a bill of exchange must show 
a title to sue upon it, in the same manner as every other plaintiff 
must show a sufficient title to enable him to maintain the action 
which he brings. Bills of exchange being of several kinds, the 
r *93 1 *^^^^^ *" ™® "P"** ™y °°^ ^^^^ °^ exchange in particular, will 
L J depend upon what kind of bill it is, and whether the holder 
claims title to it as the original payee, or as deriving from the original 
payee, or from the drawer, in the case of a bill drawn payable to the 
drawer's own order, who is in the nature of an original payee. The title 
of an original payee is immediate, and apparent on the face of the bill. 
The derivative" title is a title by assignment, a title which the common 
law does not acknowledge, but which exists only by the custom of mer- 
chants. As it_ is by force of the custom of merchants, that a bill of 
exchange is assignable at all, of necessity the custom must direct how it 
shall be assigned; and in respect to bills payable to order, the custom has 
directed that the assignment should be made by a writing on the bill 



BILLS or EXOHANOE. 73 

called an indorsement, appointing the contents of that bill to be paid to 
some third person; and in respect of bills drawn payable to bearer, that 
the assignment should be constituted by delivery only. This is simple 
and obvious ; every man who can read can discover whether the holder of 
a bill claims to be the assignee of it as indorsee, or as bearer. If, it 
should be questioned whether a bill payable to bearer passes by assign- 
ment, or whether every bearer is not an original payee, as being within 
the description in the bill itself of the original payee, it does not appear 
to me to be necessary to this argument that this question shall be decided. 
I am content that it should be taken either way. In either case the title 
of a bearer is self-evident, the title of an indorsee appears by the in- 
dorsement itself, the truth of which is guaranteed by the highest penal 
sanctions. Everything which is necessary to be known, in order that it 
may be seen whether a writing is a bill of exchange, and as such by the 
custom of merchants partakes of the nature of a specialty, and creates a 
debt of duty by its own proper force, whether by the same custom it be 
assignable, and how it shall be assigned, and whether it has in fact been 
assigned agreeable to the custom, appears at once by the bare inspection 
of the writing ; with the circumstance, in the case of a bill payable to 
bearer, of that bill being in the possession of him who claims title to it. 
The wit of man cannot devise anything better calculated for circulation. 
The value of the writing, *the assignable quality of it, and the _ ^g , -. 
particular mode of assigning it, are created and determined in the L J 
original frame and constitution of the instrument itself; and the party 
to whom such a bill of exchange is tendered has only to read it, need 
look no further, and has nothing to do with any private history that may 
belong to it. 

The policy which introduced the simple instrument demands that the 
simplicity of it should be protected, and that it never should be entan- 
gled in the infinitely complicated transactions of particular individuals, 
into whose hands it may happen to come. Hitherto that policy has pre- 
vailed. We shall all agree, that if a man claims to be entitled to a bill 
of exchange drawn payable to a real payee or order, and has not an in- 
dorsement by the payee, he cannot count upon it as upon a bill of exchange, 
though he should have paid to that payee the full value of it, and though 
it were bargained, sold, assigned, and conveyed to him, by every form of 
conveyance which courts of law and equity in this country have reoog- 
nised. This policy has lately prevailed so authoritatively, that two juries 
undef the direction of a noble and learned Judge, have established, as far 
as their verdict could establish, a title by indorsement from one of the 
name of the payee, who was not the real payee in whose favour the bill 
was drawn, but into the hands of whom the bill fell by some accident or 
negligence in the drawer. Possibly, as names are but designations of 
persons, and that bill was in fact not made payable to that person, these 
verdicts may not be acquiesced in, and the question as to that indorse- 
ment may be considered as not finally settled. While I am speaking I 
hear from authority that the question is not finally settled, for that the 
last verdict, which I had understood to be g&eral, is a special verdict; 



74 ROSS ON COMMERCIAL LAW. 

but the very question is an illustration of the proposition that a bill of 
exchange is what it imports to be upon the face of it. 

The plaintiffs in this cause have taken upon themselves to count, in 
that part of their declaration which I am now examining, upon a bill of 
exchange, and to state a title to that bill by assignment. In their fourth 
count they state a strict title to it by indorsement from John White the 
nominal payee. The special verdict has found the writing upon which 
P ^_ - ^ the *question arises, to be an instrument in writing purporting 
L ■ -I to be a bill of exchange drawn payable to Mr. John White or 
order ; but the special verdict has directly negatived the supposed in- 
dorsement by John White, and I think we all agree that upon the 
fact the plaintiffs have failed to make out that title. If my introduc- 
tory observations, are well founded, it should seem that the plaintiffs can 
make no other title to a bill of exchange so constituted. At the common 
law it was not assignable at all ; it is assignable by the custom of mer- 
chants only ; and the custom of merchants directs that the assignment 
should be' by indorsement from the person to whom it is drawn payable ; 
and I have supposed it to be agreed, that if the payee was a real person 
it could by no possibility be transferred in any other manner. But the 
plaintiffs have stated a title of a different kind in their first and second 
counts, adapted to the truth of the case as it stands established by this 
special verdict. They agree that this bill was drawn payable to John 
White or order, but they say the name John White is a fictitious name, 
and his indorsement consequently fictitious j that this was known to the 
acceptors when they accepted, that they, the plaintiffs, received the bill 
from the drawer with his indorsement upon it by procuration ; and by 
reason of all this they insist, that though they have no indorsement from 
John White, yet that according to the usage and custom of merchants 
the acceptors became liable to pay the value of the bill to them. Where 
the traces are to be found of the usage and custom of merchants apply- 
ing to such a case I have not yet discovered. This conclusion is a con- 
clusion of the law merchant, or it is nothing. How is it to be deduced? 
Surely no logician would draw such a conclusion from such premises so 
stated. If it be the arbitrary rule of positive law governing a case so 
stated, I ask, where is that rule to be found ? If no such rule is to be 
found expressly laid down in the law merchants, is it to be collected by 
inference from any of the known rules of that law ? Is it not a mon- 
strous absurdity to suppose that the usage and custom of merchants can 
have anything to do with a case which upon the bare state of it is only 
fit for the Old Bailey to give the rule upon ? What is the proposition of 
r *96 1 *^^ plaintiffs, reduced *to the fewest words possible ? "We are 
L J not the assignees of this bill of exchange by the indorsement of 
the payee, it is impossible we should be, because in truth there was no 
payee in existence;' therefore according to the usage and custom of mer- 
chants we are entitled." Whereas the conclusion which the custom 
makes, must be, "Therefore you are not entitled." The common law 
must say the same thing. It must say, « it is only by force of the cus- 
tom of merchants that this chose in action can be claimed by an 
assignee ; you have not made yourselves assignees according to the custom 



BILLS OP EXCHANGE. 75 

of merchants, therefore the common law cannot recognise your title." 
These plaintiffs, instead of showing themselves assignees according to the 
custom, have confessed that they are not such assignees, and in doing this 
they have furnished another argument against their title, to which I could 
never find an answer, viz., that this supposed bill of exchange was in its 
original conception a mere nullity, a piece of waste paper, upon which 
the custom of merchants never attached, in which no man ever had an 
interest, and in which, consequently, no interest could be transferred under 
any pretence of indorsement by anybody, or by delivery of possession, 
or in any other manner whatsoever. 

This argument may require a little more examination and discussion. 
I will go by steps. If I put in writing these words, " I promise to pay 
£500 on demand, value received," without saying to whom, it is waste 
paper. If I direct another to pay j6500 at some day after date for 
value received, and not say to whom, it is waste paper. Will it mend 
the matter if I say "I promise to pay £500," or if I direct another 
"to pay £500 to the pump at Aldgate?" I use that vulgar expres- 
sion because it has been used, and because it forcibly expresses the 
idea I wish to convey ; what is a fictitious payee but the pump at 
Aldgate? If I add, "or order," what difference does it make? If I 
add, " or bearer," there is a very sensible difference. There may 
be a bearer, but in the nature of things there can be no order. The 
bill therefore cannot be transmitted by order : the fictitious payee can no 
more order than the pump at Aldgate can order. Such a bill then is a 
mere nullity in its original conception, and must ever remain a mere 
nullity. It is impossible ever to animate it or give it motion *or r^nn -. 
transmissibility. The drawers of this declaration saw these dif- L J 
Acuities in the title of the plaintiffs claiming to sue on a bill of ex- 
change payable to John White, a fictitious payee, or order ; and there- 
fore in the fifth and sixth counts they made a bold attempt to manufac- 
ture the bill anew. But they seem not to have made the best use of 
their materials. If they had declared upon a bill drawn by Livesey and 
Co. (the indorsers by procuration) payable to plaintiffs or their order, 
they might have alleged that our books say that every indorsement is a 
new bill ; and if that be so, this bill is a new bill, wherein the indorsers 
are drawers and the indorsees the payees. But they have not chosen to 
take this ground. In the fifth count they say simply, that the bill was 
drawn payable to bearer j in the sixth they say, that the bill was drawn 
payable to Mr. John White or order, but that the payee was fictitious, 
and therefore the contents of the bill became payable to the bearer, ac- 
cording to the effects and meaning of it. This last statement has the 
merit, at least of being very distinct : and though it determines the 
construction of the bill by a fact dehors the bill, (for it cannot appear 
on the face of the bill itself that the payee is fictitious,) it is a fact ex- 
isting at the moment when the bill was fabricated ; whereas in arguing 
the special verdict as applied to the fifth count, to show that this bill, 
though purporting to be drawn payable to order, was, in the eye of the 
law merchant, a bill payable to bearer, it becomes a very complex case. 
The subsequent indorsement in the name of John White, the indorse, 
ment by procuration from Livesey, Hargreave, and Co., and the accep- 



76 EOSSONCOMMEROIALLAW. 

tors' knowledge of the circumstances, are all called in to assist in the 
demonstration that this is a bill payable to bearer. With the drawers of 
this declaration I am at issue, with respect to the sixth count, upon a 
very short point. They say that a bill drawn to a fictitious payee is a 
bill payable to bearer, according to the effect and meaning of it : I say 
that such a bill is a mere nullity. To my apprehension it is not a very 
sound argument that it must be payable to bearer because it cannot be 
payable in any other manner. I observe that it is not even stated in the 
sixth count, that by reason of the payee being fictitious, the bill became 
r *q8 n Payable to bearer according to the usage and *eustom of mer- 
L J chants; but the words, "according to the effect and meaning 
of the bill," are substituted in the room of those other words. Upon what 
authority was it said that such was the effect and meaning of this bill ? 
It is directly contrary to the purport of it. If the intention of the 
drawers^ the acceptors, or the plaintiffs themselves, will assist us to find 
out the intent, which the purport of the bill is to be supposed not to have 
suflSciently conveyed, they all consider this bill as a bill not payable to' 
bearer, but as a, bill to pass by indorsement in strict conformity to its 
purport ; and there are, in fact, indorsements upon it. Where then is 
the authority for the averment, that it was according to the effect and 
meaning of this bill that the contents should become payable to bearer ? 
Ifi there any better proof of this averment than it must be so because it 
could not be payable to order ? 

Thus far I have considered this bill simply as a bill drawn to a ficti- 
tious person or order, without more, with a view to the allegations in the 
sixth count. If we go a step further, we get into the particular cireum- 
stances stated in the special verdict, and the general proposition in the 
sixth count is then abandoned. I am now to enter upon a discussion of 
those circumstances. In examining the argument upon the particular 
circumstances of the case of these plaintiffs, as stated in the special ver- 
dict, with a view to the application of them to any of the counts, and 
particularly to the fifth count, to which they have been supposed capable 
of being applied, I confess I have great diflSoulties to encounter. Trans- 
actions are stated which arose subsequent to the making of the bill : how 
they can affect the construction of the instrument at all, what the chain 
of reasoning i^, how they cofflclude to make a bill, drawn payable to John 
White or order, a bill payable to bearer rather than a bond, I confess 
myself at a loss to comprehend. The sixth count supposes this metamor- 
phosis to have been the immediate effect of the payee being fictitious; then 
this was a. bill payable to bearer before the delivery of it to the plaintiffs, 
before the acceptance, and before the false indorsement of the name of 
John White, and the real indorsement of the drawers by procuration • 
then an honest acceptor, who did not know the fact of the payee being 
r *99 1 fi'=*i*'°"3> became *bound to pay this bill to any man who brought 
L J it without an indorsement ? Is an honest acceptor to be put into 
that predicament ? When he requires an indorsement as the title of the 
holder to demand payment of him, agreeable to the purport of the bill, 
is he to be answered with an action and a recovery against him by the 
bearer, upon proof made at the trial of a fact (of which he knew nothing) 



BILLS OF EXCHANGE. 77 

ttat the payee was fictitious, by reason whereof, according to the effect 
and meaning of the bill, the contents became payable to the bearer? 
This surely is too strong to be insisted upon. The sixth count must 
therefore be abandoned, and the knowledge of the acceptor must be taken 
in aid to eke out this extraordinary proposition. The fact, as it is stated 
in the special verdict, is, that the acceptors at the time of their accepts 
ance, knew that the payee was fictitious. The argument which is built 
upon this fact, if I understand it, is argumentum ad hominem, that he 
shall never be permitted to defend himself by alleging that the payee 
was fictitious, and therefore that the plaintiffs have no title. The argu- 
ment is pushed one step further, it is said, as against him it shall be a 
bill payable to bearer. We have legal principles which govern the argit- 
mentum ad hominem ; as far as they will lead me I am content to follow 
them; but I dare not go further. I am ready to admit that beyond the 
strict legal estflpples by deed and in pais, we have received into the law 
of England a sort of moral estoppel. We say, no man shall be heard 
to allege his own crime or turpitude in his defence. And in that sense 
I agree that no man shall take advantage of his own fraud, and he shall 
not set up his own fraud by way of defence. 

But a plaintiff must always recover upon his own strength. He must 
state and he must prove a case, which is prima facie sufficient. When 
that is done, a defendant shall not set up his own fraud by way of an- 
swer and defence. As against him, the plaintiffs' case, though defective 
if the whole truth could come out, shall prevail. That this is the rule 
of law which governs legal estoppels, will appear by a reference to two 
cases reported by Lord Eaymond, Hermitage v. Jenkins, 1 Lord Kaym. 
729. Palmer v. Ekins, 2 Lord Raym. 1550. In the last, Lord Ray- 
mond says in giving the judgment of the Court, — " *There, r»iQQ-| 
upon the very face of the declaration, it appeared to the Court ^ -• 
that the lease from the defendant was only a lease by estoppel, and no- 
thing of interest could pass thereby, and consequently nothing could pass 
by the assignment to the plaintiff; but here, upon the face of this declar- 
ation, a good title appears in the plaintiff, and that being so, the declara- 
tion itself is good, and the defendant by her plea pleads a fact, which by 
her indenture she is estopped from pleading, which makes the plea ill." 
As to the moral estoppel, I will cite the concluding words of a judgment, 
3 Term Rep. 403, pronounced against a plaintiff by a noble and learned 
judge in the name of the whole Court of King's Bench. "The defence 
which is made is of a most unrighteous and unconscientious nature, but, 
unfortunately for the plaintiff, the mode which she has taken to enforce 
her demand cannot be supported, and consequently there must be judg- 
ment for the defendant." The noble and learned Lord was perfectly 
correct when he delivered this opinion. Where the plaintiff himself 
cannot show a primS. facie case, the defendant is not driven to plead any- 
thing; he demands the judgment of the Court upon the plaintiff's own 
case. A defendant may be estopped to plead, but was it ever seen in 
our law that a defendant was estopped to demur? As to some of the 
counts in this declaration, and among them the sixth, we are in effect 
now arguing a demurrer to the declaration. With respect to such of the 

April, 1854.— 6 



78 EOSSONCOMMEEOIALLAW. 

counts as are to be maintained by the facts in the special verdict, and 
among them the fifth, I agree with Mr. Justice Heath, that those facts, 
which in the shape of allegation or averment upon record would make a 
count ill upon demurrer, must have the same effect in evidence when 
proved ; and it is to be observed, that the facts which destroy the plain- 
tiff's title to put this bill in suit, this leading fact in particular, " that 
the payee was fictitious," are found by a jury, and a jury are never estop- 
ped to find the truth of a matter in pais, even in cases where a defendant 
would be estopped to plead it. 

The argument in favour of the plaintiffs, founded upon the knowledge 
of the acceptors, divides itself into two branches. 1st, The defendants 
r#inn ^^ °°* ^^^ "P ^^^ fictitious payee by way *of defence, (which I 
L J agree to be a fair argument, and only dispute the application of it.) 
2dly, That as against them, the bill shall be taken as a bill payable to 
bearer. This I controvert; I say, unless it can be proved'that it is a bill 
payable to bearer against all the world, it never can be shown to be a bill 
payable to bearer against them. Let the defendants' knowledge evidence 
everything it can evidence; infer from it everything yon can infer; you 
cannot infer from it, nor will it evidence that the bill is a bond. No more 
can you infer, no more will it evidence that a bill payable to order is a 
bill payable to bearer. This is absolutely turning one thing into another, 
instead of making reasonable intendments and inferences from premises 
which fairly warrant them. It is also to be observed that we are not now 
directing juries what inferences of fact they ought, to make from the facts 
in evidence before them, where there will be a certain latitude, which an 
honest indignation in a case of great fraud, may sometimes enlarge to its 
utmost verge. But we are applying rules of law to a precise state of 
facts in a special verdict, where no latitude at all can be admitted. I 
said that the first branch of this argument was inapplicable. The defect in 
the plaintiffs' title arises upon their own showing in the declaration, and 
in evidence. Having no title, they are obliged to state, in the place of 
title, that the defendant has been party to a fraud on them, by which 
they have been robbed of their title. Every court of justiee.may and 
ought to say this is a wrong, for which there ought to be redress. But 
what court can say, that by reason of such premises the plaintiff is not 
robbed of his title but has a title ? or if they are obliged to admit that 
he is robbed of the title for which he bargained, can say, " true, but we 
will make another for him?" This is what is here insisted on, and this 
is what I cannot comprehend. I trust that I have a proper detestation 
of fraud, but I conceive that it would be much better to punish fraud 
when we meet with it in the direct way, either criminally or by the ac- 
tion ex delicto, than to refine too much in order to correct it at the 
hazard of shaking general rules and disturbing land-marks. This is a 
sort of countermining, which I think a very delicate and a very danger- 
ous operation. 

r*1021 *■*■ ^^^^ °°' forgot that an argument has been drawn from a 
L -1 supposed analogy between bills of exchange and deeds, to prove 
that a court of justice ought to new-mould a bill of exchange, and con- 
strue a bill drawn payable to order to be a bill payable to bearer, ut res 



BILLS OF EXCHANGE. 79 

magis valeat qudm pereat. I discover no analogy between deeds and 
bills of exchange. Deeds are at the common law, they have their ope- 
ration and their construction by the rules of the common law, they are 
contracts of a more solemn nature than other contracts; between particu- 
lar parties, respecting particular interests, in particular subjects. Bills 
of exchange are instruments taking effect by the custom of merchants, 
intended to circulate visible property according to their apparent purport, 
entirely detached from, and independent of all particular interests, par- 
ticular subjects, and the private transactions between the original parties 
to the instrument. And I think I may fairly argue from the different 
nature of the instruments, that upon the very same general principles 
which have disposed the common law of England to mould deeds by con- 
struction, so as to effectuate the intent of the parties, ut res magis valeat 
quam, pereat, the law merchant must restrict bills of exchange to the 
precise mode of negotiation determined by the language of the bills 
themselves, without regard to anything dehors. 

But let it be supposed, for the sake of the argument, that there may 
be some analogy between deeds and bills of exchange ; I ask what are 
the instances in which construction and interpretation have taken so 
great a liberty with deeds as to afford an argument by analogy, for con- 
struing in this case a bill drawn payable to order, to be a bill drawn 
payable to bearer? The instances which had occurred to me as likely to 
be insisted upon, do, in my apprehension, afford no argument in support 
of this position. A deed of feoffment upon consideration without livery, 
may enure as a covenant to stand seised to the use of the intended feoffee. 
A deed importing to be a grant by two, one having a present, the other 
a future interest, may enure as the grant of the former, and the confirma- 
tion of the latter. A feoffment without livery operates nothing as a 
feoffment, is in truth no feoffment, but is a deed, which under circum- 
stances may operate as a covenant to stand seised to *uses; why? pi-iAq-i 
The feoffor has by the deed agreed to transfer the seisin and his L -» 
right in the subject to the feoffee. If the consideration is a money con- 
sideration, or a consideration of blood, which is more valuable than 
money, the law raises out of the contract a use in favour of the intended 
feoffee. The seisin which remains in the feoffor, because the deed is in- 
sufficient to pass it, must remain in him bound by the use. This is the 
effect of the feoffor's own agreement plainly expressed upon the face of 
this deed. His agreement by his deed iS in law a covenant, and by this 
simple process does his intended feoffment become, in construction of 
law, his covenant to stand seised to uses. It is a construction put upon 
the words of his deed which his words will bear. So a deed importing 
a grant of an interest by two, one entitled in possession, the other in 
reversion, is in consideration of law the grant of the first, and the con- 
firmation of the second ; why ? The deed imports to be the grant of a 
present estate by both, and it is the apparent intent of both that the 
grantee shall have the estate so granted ; but the deed of the latter hav- 
ing no present interest to operate upon as a grant, nothing can pass by 
it as a grant. But this party has a future interest in the subject, out of 
which he may make good to the grantee the estate granted to him by the 



80 aOSSONOOMMERCIALLAW. 

first grantor. This is to be done by a particular species of oonveyanee^ 
called a confirmation. The words whicb are used in this deed, in their 
strict technical sense, are words of confirmation as much as they are words 
of grant. In the mouth of this party the law says that they are words 
of confirmation, and shall enure as words of confirmation in order to 
give effect to his deed, ut res magis valeat qudm pereat. Here again 
the construction which the law puts, upon the words of the deed, is a 
construction which the words will bear. The words have several techni- 
cal senses, of which this is one, and the law prefers this, because it car- 
ries into execution the clear intent of the parties, that the estate and inte- 
rest conveyed by that deed shall pass. In both those cases we find words 
interpreted, not in their most general and obvious sense it is true : but if 
they are interpreted in a manner which the jus et norma loguendi in 
r*in4.T conveyances will warrant, there is nothing of violence in »suoh 
l -I construction. Indeed, I do not know how it would be possible to 
read a single page of history in any language, without using the same 
latitude of construction and interpretation of words. 

To go one step beyond these instances : I venture to lay it down as a 
general rule respecting the interpretation of deeds, that all latitude of 
construction must submit to this restriction, namely, that the words may 
bear the sense which by construction is put upon them. If we step be- 
yond this line we no longer construe men's deeds, but make deeds for 
them. Sir Edward Coke, in his comment upon one of the sections of 
Littleton's chapter on Confirmation, has a passage which is at once an 
authority for this rule, and an illustration of it. "Here it is to be ob- 
served that some words are large and have a general extent, and some 
have a proper and particular application. The former sort may contain 
the latter, as dedi or concessi may amount to a grant, a feoffment, a gift, 
a lease, a release, a confirmation, a surrender, &c., and it is in the elec- 
tion of the party to use them, in pleading, to which of these purposes 
he will. But a release, confirmation, or surrender, &c., cannot amount 
to a grant, &c. ; nor a surrender to a confirmation, or to a release, &c., 
because these be proper and peculiar manner of conveyances, and are 
destined to a special end." — Co. Lit. 301 b, or, in other words, " They 
are narrow words, and have a particular sense only, and a proper and 
particular application only." 

Having read this passage to the House, I begin to think that I should 
do well to claim the benefit, on my part of the argument, of the analogy 
between deeds and bills of exchange, and of the analogy between the 
rules of construction which govern those instruments respectively. For 
surely a surrender and a grant are not more unlike each other, than a 
bill of exchange payable to order and a bill of exchange payable to 
bearer. And if bills of exchange payable to order, and bills of exchange 
payable to bearer, are each of them in the nature of proper and peculiar 
manner of conveyances, and are destined each to a special end, the anal- 
ogy requires that the one should never he deemed to amotint to the other. 
r*1051 ^^ ^®*®' ^^^^ passage, by putting the construction and operation of 
L J *deeds, and particularly the deed of grant operating as a confir- 
mation, upon a rational and intelligible footing, will help to clear away 



BILLS OF SXCHANGE. 81 

a part of the argument which having the countenance of great authority- 
deserved great attention on my part, and which has very much perplexed 
my mind ; heeause after all the pains I have taken in examining it, I 
could never see distinctly its application to this case. Indeed, I think it 
must generally happen that there will be a fallacy in an argument built 
upon the application of the rules and principles of the common law, 
more especially the law concerning real property to the law merchant, or 
to any other local or limited law. And I am much inclined to think 
that the fallacy of the argument on the part of these plaintiffs, if there 
be a fallacy, consists in this, that the distinction between the common 
law and the law merchant has not been sufficiently attended to. I can 
very well understand how the common law, though it refuses its sanction 
to the acceptance of a bill of exchange merely as such, (as being in the 
eye of the common law nudum pactum only,) may interpose between the 
acceptor, drawer, and payee, to regulate engagements which they may 
have entered into for a valuable consideration respecting such accept- 
ances ; may, in a very particular case, indemnify an acceptor in paying 
a bill, or even oblige him to pay such a bill to a person not entitled by 
the law merchant to demand it, and to pay it in a course not warranted 
by that law. We have seen that bills of exchange may become evidence 
to support the several sorts of indebitatus assumpsit. But what I insist 
upon is, that if a man will demand payment according to the law mer- 
chant, he must bring his case within that law, and, in my apprehension, 
can pray in aid nothing of which the law merchant will not take notice, 
though it should happen that the common law might take notice of it. 
Thus, in this case, the plaintiffs, supposing them to be innocent indor- 
sees, may perhaps, (I use the word perhaps, because this point is not the 
point now in judgment,) upon the ground of this bill, have a remedy at 
the common law for the wrong done to them in passing upon them a bad 
bill, where they had a right to expect a good one. But it would be the 
grossest absurdity in the world for them to insist that because a bill 
*which is bad by the law merchant was passed upon them for a -^^ „„-, 
good one, therefore it became a good one by the same law mer- L J 
chant, or that it could be made good by the common law eo nomine, as 
a bill of exchange. Another, a different remedy they may have by the 
common law, and I have no doubt but that the plaintiffs would have 
sought their remedy in that mode, if bankruptcies and insolvencies had 
not intervened, which would probably defeat a suit of that nature. This 
will not be a reason with the House of Lords for straining any point in 
order to reach this case, inasmuch as it must be at the expense of cre- 
ditors who have now vested interests in the fund and estates of their 
debtors, which ought not to be divested or diminished but in the strict- 
est course of law. 

I have hitherto purposely avoided touching upon the supposed hard- 
ship of the particular case of these plaintiffs, or upon the magnitude of 
the question in respect of the property which may be affected by it, or 
as it may affect the interests of commerce. In general, considerations of 
hardship interest our feelings too much. It may be a hard case, but the 
law ought not to be strained, much less altered, in order to reach this 



82 ROSSONCOMMEROIAIiLAW. 

hard case. I have already observed, that it becomes a hard case only 
from the accident of the insolvency of the parties,; admitting it to be a 
hard case. But where is the hardship ? The plaintiffs pay that the 
acceptors were informed that this bill was drawn to a fictitious payee. 
Were the plaintiffs themselves informed of it ? It is not so found by the 
special verdict, but I thini there is great reason to apprehend that they 
were informed of it. .They take the bill under an indorsement by pro- 
curation from the drawer. A bill drawn payable to a real payee, and 
coming fairly back again into the hands of the drawer has done its duty, 
and would be cancelled unless the opportunity of cheating the public of 
the stamps be admitted to be a good reason for throwing; it back again 
into circulation. Surely the circulation of such a bill by indorsement 
from the drawer, upon discount, is not a regular mercantile transaction, 
but gives the party, to whom such a bill is offered, ground to suspect 
wh^t the real truth is. If he had such ground to suspect, why.should he 
not take the consequence ? I understand that there are a great number 
r*1 071 °^ °*?'" ^^^^^ which wait the *event of this cause : I am afraid to 
L J say to what amount; to so enormous an extent has the false 
credit of these drawers and acceptors been pushed. This circumstance 
has had its weight, all the weight it ought to have ; it has produced the 
most careful investigation of the claim. 

I confess myself to be a very imperfect judge of the interests of com- 
merce, and probably I am mistaken in my notions of the effects which 
this cause may produce in the commercial world. But I will venture 
to state what has passed in my mind upon this subject. I take the in- 
terests of commerce to be deeply concerned to support fair, and to dis- 
countenance false credit. I take it that the interests of gentlemen who 
trade in the discount of paper money, and the interests of commerce are 
not exactly the same. I apprehend that the commerce of the kingdom 
may receive a deep wound from the failure of a capital house for half a 
million, when the persons who have been discounting the paper of such 
a house shall receive not less than twenty shillings in the pound,, by 
proving their debts under twenty eommissions of bankrupt. That gentle- 
men of this description should loudly complain of any check or interrup- 
tion given to the circulation of fictitious bills of exchange, I can conceive. 
They may like them the better for being fictitious. He who has circu- 
lated a forged bill, will for very obvious reasons move heaven and earth 
in order to raise money to take up that bill when it becomes due, when 
he can pay no other, creditor. That the merchant should join in the com- 
plaint, is to me incomprehensible. He ought not to forget the original 
and true use of bills of exchange ; that they are bottomed in real mer- 
cantile transactions, that they are then the signs of valuable property and 
equivalent to specie, enlarging the capital stock of wealth in, circulation, 
and thereby facilitating and increasing the trade and commerce of the 
country. Such are the bills of exchange which the usage and custom of 
merchants originally introduced into the commercial world, and intended 
to protect. Let the merchant contrast such bills of exchange with that 
false coinage of base paper money which has been of late forced into cir- 
culation ; the use of which is to encourage a spirit of rash adventure, a 



BILLSOFEXOHANGE. 83 

spirit of monopoly, a spirit of gaming in commerce, luxury, extravagance 
and fraud of every kind, to *the ruin and destruction of those j-^, „„-. 
whose credulity can be practised upon by a false appearance of L -1 
regular trade, carried on upon a solid bottom ; and then let him say 
■whether he dreads the reversal of this judgment. 

I confess I thought that a fortunate occasion did now present itself, for 
interposing a most salutary check to a growing evil ; an evil already 
swollen to a most enormous bulk, the weight of which must necessarily 
cramp and depress every man who trades upon his own capital, and which 
threatens to overwhelm the fair trader. Let us not deceive ourselves. 
There is but one remedy for the evil. If such bills may be recovered 
upon, if they may be proved under commissions of bankrupts, there are 
persons enough interested to give them circulation, let the hindmost fare 
as he may. To check them, and oblige men to deal fairly, as far as real 
names go to constitute fairness, the recovery must be stopped. If the 
real parties can keep back their own names by using fictitious names, 
they can cover this false credit in impenetrable darkness. This Lord 
Mansfield saw very distinctly in the case of Stone v, Freeland. But that 
which I do not understand in that case is, how it happened that for the 
first time in his life he expressed no disapprobation of an apparent fraud, 
but assisted to give it efiect. Touching the efiect and application of that 
case to the present, I refer to Mr. Justice Heath's observations upon it. 
I have only to add, that knowing that I had the misfortune to differ from 
many of my learned brothers in the opinion I have entertained of this 
case, I had too much reason to apprehend that I had totally misunder- 
stood it, and have very reluctantly committed myself in this unequal 
contest. But Mr. Justice Heath's argument will be an apology for my 
giving this House so much trouble. The answer to the second and third 
questions, which it is my duty to submit to your lordships, thinking as I 
do of the case, is, that upon the matter found in the special verdict, the bill 
mentioned in the fifth count cannot be deemed in law a bill payable to 
bearer ; and that the matter of the special verdict will not sustain any 
other count in the declaration. 

Heath, J. — The second question is. Whether this may be declared on 
as a bill payable to bearer ? Every instrument *must derive its p^j^^^Q-. 
operationjfrom the powers of the granter and the legal effect of L J 
the instrument, and no extrinsic evidence can be adduced, unless it be to 
explain a latent ambiguity, which is not the present case. This purports 
on the face of it to be a bill of exchange payable to order. The drawer 
had power to give it that form, the defendants have so accepted it, and 
no evidence can be received to give it a different operation. It has been 
insisted on in argument, and indeed it was the ground of the decision in 
the Court of King's Bench, that if the contract of the party cannot, con- 
sistently with the rules of law, operate in the way intended, that it shall 
operate according to his power at the time of making it. And this has 
been attempted to be supported by a passage cited out of Co. Lit. 45 a, 
concerning a lease granted by tenant for life and a remainder-man, where 
it was held that the deed should operate, during the lifetime of tenant 
for life, as his lease, and the confirmation of him in remainder, and after 



84 KOSS ON COMMERCIAL LAW. 

the decease of tenant for life, as the lease of the remainder-man : and it 
has been urged, that the difference between a bill of exchange payable to 
bearer and payable to order, is not greater than between a lease and con- 
firmation. To this I answer, that I freely admit, if a deed or instrument 
cannot operate in such manner as was intended by the parties, it shall 
operate as by law it may ; but then apt words must be inserted for that 
purpose. As to the instance cited, I answer, there are no technical words 
necessary to make a deed operate as a confirmation : it is sufficient if the 
party confirming ratifies the estate, which another had granted. Co. Lit. 
301 b, has accurately taken the distinction concerning the operation of 
deeds, viz., " Some words are large, and have a general extent, as dedi or 
concessi, which may amount to a feoffment, a grant, a gift, a lease, re- 
lease, confirmation, &c. But a release, confirmation, or surrender, can- 
not amount to a grant, nor a surrender to a confirmation, or release, 
because these be proper and peculiar manner of conveyances, and are 
destined to a special end." From this passage, as well as from common 
experience, the following conclusions are to be drawn : — 

First, That the operation of a conveyance is not to take effect simply 
from the power of the granter, but conjointly from bis power and the 
r*i 1 m ^^g^l operation of the instrument. If *each single mode of con- 
t- -" veyance could operate in all possible ways, and to every purpose, 
it would be nugatory and useless to have several modes of conveyancing, 
and conveyancing itself no longer governed by any principle, would cease 
to be a science. To make the analogy perfect between a deed and a bill 
of exchange, in respect to the rule of construction that must govern 
them, it must be shown that the present bill contains such apt and ope- 
rative words, that it may be construed either as made payable to order 
or bearer ; so that if it cannot operate as a bill payable to order, it must 
be taken as a bill payable to bearer. But the contrary manifestly appears 
on the face of the two instruipents j and if this construction were to pre- 
vail, it would raise a contract beside the intention of the parties j for the 
drawer of a bill payable to bearer, in adopting that form, exonerates the 
drawee from certain inconveniences attending bills payable to a certain 
person or order, such as a danger of the hand of the first payee being 
forged. The drawer of a bill payable to order consults the convenience 
and security of the first payee and the subsequent purchaser of the bill, 
without whose authority the drawee is not safe in paying the bill, so that 
if the bill be stolen or casually lost, the true owners of the bill may be 
safe. As these instruments are so different in their operation and des- 
tined purposes, they are not convertible ; and it may as well be eon- 
tended, that a release will operate as a grant, as that a bill payable to 
order can be declared on as a bill payable to bearer. To consider this 
in another point of view. A bill payable to bearer is more comprehen- 
sive than a bill to order, inasmuch as it comprises all the special ap- 
pointees to whom a Mil of the latter sort may be directed. It was how- 
ever decided in the case of Hodges v. Steward, 1 Salk. 125, at a time 
when a bill payable to bearer was not deemed to be within the custom of 
merchants, that a bill payable to a certain person, or bearer, could not, 
by an indorsement of the first payee, be converted into a bill payable to 



BILIiSOFEXOBANGE. 85 

Order, so as to charge the drawer. The obvious reason is, that it was 
the intention of the drawer to frame a bill payable to bearer, and he 
could not be charged beyond his original undertaking. It seems to be a 
just and necessary inference, if the more comprehensive bill which is pay- 
able to bearer, cannot be changed into the less •comprehensive p^, -.-.-. 
which is payable to order, that the reverse cannot take place. It L J 
is repugnant to every principle of law, that specialties, or instruments in 
the nature of specialties, should receive a construction from such extrin- 
sic circumstances, which their import does not warrant; and if they 
were to be construed not according to their legal operation, but according 
to the power of the person from whom they move, as is now contended, 
this novel principle would have the wonderful effect of curing all defects 
in deeds and instruments, provided that the maker of them had but suf- 
ficient power for the purpose. 

In order to prove that a bill may receive a construction different from 
its tenor, a bill has been supposed payable to the pump at Aldgate or 
order, and it has been demanded whether this would not be a bill pay- 
able to bearer? I answer in the negative without hesitation. It is a 
bill payable to an inanimate thing, under which no title can be derived. 
It is not the province of the law to assist folly ; recourse must be had to 
the drawers. There is another essential difference between different con- 
veyances concerning the same subject, and bills payable to order and 
bills payable to bearer, which is, that in respect to conveyances the contract 
is the same, and the only question is, in what legal form it shall take 
effect. In respect to bills the contract is different, and one species of 
contract cannot be substituted for another. Arguments drawn from the 
inconvenience of the decision are strong and forcible. It is the object 
of the drawers of bills, that the bills should pass in circulation, and the 
interest of commerce requires it. The law of England, which generally 
discountenances the assignments of debts and choses in action, has in 
this instance submitted to the custom of merchants. It is the essence of 
a custom, that it be certain and reasonable. If it be defective in either 
of these particulars, it must yield to the common law, concerning which 
there can be little doubt. To construe this bill to be payable to bearer, 
on account of the latent circumstance of a fictitious payee, unknown to 
the purchaser at the time, is to introduce infinite confusion and perplex- 
ity. Suppose the purchaser of a bill not finding the payee of a bill, de- 
clares on it as being payable to bearer, the acceptor might defeat the 
action by setting up some obscure person bearing the name of the payee. 
If the attesting *witnesses to a bond could not be found, or if riitiiA-i 
there were none, so that the delivery could not be proved, and L J 
therefore a recovery could not be had on it as such, it cannot be con- 
tended that in an action of assumpsit the bond might be given in evi- 
dence as a note of hand. The reason is evident ; the creditor has taken 
his security in a certain determined form, he cannot at his pleasure alter 
it against the stipulation of the debtor, and yet the obligation includes a 
promise to pay the money. 

In this case the jury have found that there was a fictitious payee ; but 
can the holder of the bill be always prepared with the evidence ? If it be 



86 BOSS ON COMMEBClAIi tAW. 

doubtful on the face of the instrument what is the legal operation and 
effect of it, where is the certainty ? If it be founded in fraud, where is 
the reasonableness ? 

The coiihsel for the defendants in error have given up all the other 
special counts except the third, wherein it is stated that Livesey, Har- 
greave and Co. directed the bill to be paid to them by the name of John 
White. I answer, that the custom of merchants as little applies to this 
count as to the other special ■ counts, for no custom can warrant the 
drawing of a bill payable to one man by the name of another. But it 
has been urged at the bar, that the acceptors shall not be received to 
annul their own acceptances, and that it does not lie in their mouths to 
insist on the proof of the hand-writing of the first payee, when they knew 
at the time of their acceptance' that he was merely fictitious, and no such 
person as John White really existed. In support of this argument they 
cited the case of Stone v. Freeland, which was determined at Guildhall 
Sittings after Easter Term, 1769. The circumstances of that case were 
the same as the present, and Lord Mansfield, after observing that the bill 
was drawn to enable the drawer to raise money, told the jury that the 
defendant had enabled the drawer to do this by lending his acceptance, 
and when he had by so doing put the bill in circulation, it should not 
lie in his mouth to make the objection that he had nothing to do with it. 
On this decision I first observe, that the noble and learned lord did not 
mean to controvert the general rule, that it is necessary in order to re- 
cover against the acceptor to prove the hand-writing of the first payee, 
r*1 1 SI ^^^ °°^y ^^ '^^ particular circumstances of *the case dispensed 
L -I with the proof. In the same manner, if the obligor of a bond 
should fraudulently remove a witness, and it should so appear at the 
trial, the bond is established by the acknowledgment of the party, with- 
out further proof of the hand-writing. Suppose in the case of Stone v. 
Freeland the jury had found a special verdict, they must have found the 
indorsement of the first payee, considering the defendant as being estopped 
from requiring the proof it; but here the contrary is found. In order 
to examine how far the authority of this case is applicable, it ought to 
be considered, whether the circumstance of its being known to the ac- 
ceptors that the payee was fictitious, will enable the plaintiffs who were 
indorsees to recover on any of the counts in this declaration. It will not 
support those special counts where it is expressly stated, because such 
instrument is founded on fraud, and not on the custom of merchants. 
Those counts are radically bad, and will not warrant a recovery on them 
by the plaintiff. If this allegation will vitiate the counts, in which it is 
stated, it must necessarily follow that the proof of them will have the 
like effect in respect to the other special counts where no such allegation 
is inserted. The fourth count is the only special one that may be sup- 
ported in point of law, to which it may be applied. The count states 
the first payee to be a real person, and his indorsement to be a real trans- 
action. But the finding of the jury directly contradicts it, by stating it 
to be a fiction. It seems to me, that the plaintiffs below should have 
availed themselves of the authority of the case of Stone v. Freeland if it 
be law, at the trial j they should have insisted that the indorsement of 



BILLS OF EXCHANGE. 87 

the first payee ought to have been received as proved; but having missed 
that opportunity, they are now too late. 

The oases of Tatlook v. Harris, decided in the King's Bench, and 
CoUis V. Emmett, decided in the Common Pleas, are against my opinion. 
I vras prevented by sickness from attending my duty in Court when the 
last case was decided; if I had been present, I could not have concurred in 
that decision notwithstanding the great deference I have for the superior 
learning and abilities of the other Judges. But this case is brought be- 
fore your lordship in order to review those decisions. Your ffi-,-,4-, 
•lordships have a right to call on me for my best opinion on this L J 
subject, and it is my duty to give it. It is agreed on all hands that the 
circulation of these bills is extremely mischievous, and ought to be re- 
strained. It is the great commercial evil of these days, which has grown 
to a gigantic height. It has enabled needy adventurers to engage in 
desperate undertakings, relying on the money which they raise on this 
fictitious credit. On the present question, a million of property now de- 
pends. No wonder that this traffic has spread poverty, distress, and 
bankruptcy, through large districts which it has pervaded. To enable 
the holders of such bills to recover against the acceptors without proving 
the hand-writing of the first payee, is to stamp a credit on the bills them- 
selves. The acceptors without efiects are tempted by a large commission 
to lend their credit. The obvious reason of inserting the name of a fic- 
titious payse is, that too many bills should not appear in circulation in 
the same name at the same time. Make it necessary for the purchaser 
of the bill to look to the first payee, and it will be impossible to defraud 
mankind in the manner and to the extent that it has been practiced. In 
order to administer an efiectual remedy to this evil, it is not necessary to 
stretch the common law beyond the known and temperate decisions of 
former times. It is not necessary to introduce subtle inventions and new 
modes of reasoning, unknown to the plain sense and understanding of our 
ancestors. Let the ancient law be adhered to, and the evil must in a 
great degree cease. Nor is the plaintiff without remedy ; for he may 
sue the drawer, and probably by another, differently framed from any of 
the present counts, or by an action differently conceived, he may recover 
against the acceptors; but on that I give no opinion. 

After the Judges had delivered their opinions, the House adjourned. 
On Monday, February 14, a debate took place, in which Lords Kenton, 
LoTJGHBOROTiQH, and Bathubst, spoke in favour of the judgment, and 
the Lord Chancellor Thurlow against it. The several grounds of argu- 
ment taken by their lordships respectively were nearly the same as those 
above stated in the opinions of the Judges. 

*The debate being concluded, the Lord Chancellor put the rj(,i-iK-i 
question whether the judgment of the Court of King's Bench L J 
should be reversed, which passed in the negative without a division — 

Judgment affij^med. 



1. In the case of Vere v. Lewis, 3 T. R. 182, the second count stated the bill 
to be payable to bearer although the party in whose favour it was drawn was fie- 



88 EOSSONOOMMEROIALLAW. 

titious. Lord Kenyon, Chief-Justice Ashhurst, and BuUer J , thought that the 
plaintiff might recover on this count. In CoUis v. Emmett, 1 H. Bl. -ii^; JMg" 
ment was obtained by the plaintiff on a count stating the bill to be payable to 
bearer, although made payable to a fictitious payee or order. Lord Lioughbo- 
rough observe!,— " It appears to us that judgment may fairly be supported on 
the count stating the bill to be a bill payable to bearer. It is certainly not lite- 
ratim payable to bearer; it is drawn payable to George Chapman or order. 
Upon a fact set forth in the special verdict, it appears, that by the permission at 
least, if not something more than the permission, of the defendant, a power was 
given to Liveaey & Co. to draw bills of exchange, binding him, in any manner 
they thought proper, within the limits of that power. There is no doubt they 
might, within those limits, have drawn a biU in terms payable to bearer ;_the bill 
they have chosen to draw is a biU payable to Chapman or order ; and it is tound 
in the verdict that there is no such person as Chapman. Now, the consequence 
of this seems naturally and justly to be, that when a security is negotiated on 
which, by the terms of it, the party receiving it apprehends that he has a clear 
right to recover, and by the insertion of the name of a fictitious person bis re- 
covery is impeded (it being impossible to prove the order of a person who has 
no existence,) it should seem in point of law precisely the same in effect as it it 
had been made payable to bearer. A bill of exchange is an authority to pay 
pursuant to the order of the payee, and it is also an undertaking to pay pursu- 
ant to that order. But if there be no person who by any possibility can give 
such order, the engagement must be to pay the bill. If the order of the person 
r4t,,„-,cannot be procured, and with the knowledge and privity of the parties 
L J who make *the bill, such a name is put in as cannot give an order, it iB 
in effect, and in point of law, the same thing as if they had made it payable to 
the person who held the biU, namely, the bearer. The determination of the 
Court of King's Bench has approved the same rule, and we think that a right 
determination." 

2. In Gibson v. Hunter, 2 H. Bl. 288, it was held by the House of Lords, 
affirming the judgment of the Court of King's Bench, that in an action on a bill 
payable to a fictitious payee or order, evidence might be led to show that the 
acceptor had accepted other bills payable to fictitious payees, although none of 
those transactions had any apparent relation to the bill in question. On this 
question there was a division among the Judges, but the majority of them, 
together with the Lord Chancellor and Lord Kenyon, declared that they thought 
that the evidence ought to have been received, and left to the jury. 

3. The case of Bennett v. Farnell, 1 Campb. 130, was an action against the 
acceptor of a bill of exchange payable to John Abney, or order. The first 
count of the declaration stated the bill to have been drawn by Robert Abney, 
payable to George Abney, Esq., or order, and accepted by the defendant. It 
averred, " That when the said last-mentioned bill of exchange was made, there 
was no such person as George Abney, the supposed payee named in the biU j 
but that the said name of George Abney was merely fictitious ; by reason where- 
of the sum of money specified in the last-mentioned bill of exchange, became 
and was payable to the bearer thereof, according to the effect and meaning of 
the same bill;" adding, that the plaintiff became bearer of the bill for a good 
and valuable consideration. There was a third count in the common form on a 
bill or note payable to bearer, with the usual money counts. The plaintiff, rely- 
ing on the authority of the cases of Tatlock v. Harris, 3 T. R. IH ; Vere v. 
Lewis, 3 T. R. 182 ; and Minet v. Gibson, 3 T. R. 481, argued that a bill pay- 
able to a fictitious person was payable to bearer ; • that it was sufficient to prove 
that the plaintiff became bearer of the bill for a good and valuable considera- 
tion. The plaintiff was nonsuited. Lord EUenborough observed, — ^I will admit 
any evidence of value having been received by the defendant. If Bennett's 
money has found its way to him, he shall not be allowed to retain it. In that 
case he has money drily in his hands belonging to another person ; and it may 
be recovered from him as money had and received. But wie bill being made 
payable to George Abney or order, the plaintiff cannot sue upon it, either as 
the mere bearer, or as indorsee of Robert Abney. Where a bill is payable to 



BII-LS OP EXCHANGE. 89 

the order of a particular person, an order from this person must be shewn by 
any one who would make title to the bill." 

4. The rubric of the case of *Bennett v. Farnell is to this effect : — " A r^, , ^-i 
bill of exchange made payable to a fictitious person or his order, is nei- ■- J 
ther in effect payable to the order of the drawer nor to bearer, but is completely 
void." In a subsequent edition, however, the reporter observes, — f In Bennett 
V. Farnell, the doctrine I have supposed to have been held, that ' a bill of ex- 
change made payable to a fictitious person or his order, is neither in effect pay- 
able to the ordisr of the drawer nor to bearer,' must be taken with this qualifica- 
tion — ' unless it can be shown that the circumstance of the payee being a ficti- 
tious person was known to the acceptor.' A new trial was refused in this case 
because no such evidence had been offered at Nisi Prius. Lord EUeuborough 
said, he conceived himself bound by Minet v. Gibson, and the other cases upon 
this subject which had been carried up to the House of Lords, though by no 
means disposed to give them any extension ; and that if it had appeared that 
the defendants knew George Abney, the payee, to be a fictitious person, he 
should have directed the jury to find for the plaintiff. 

5. In a note to the case of Bennett v. Farnell, the reporter observes, — " Al- 
most all the modern cases upon this question arose out of the bankruptcy of 
Livesey & Co. and Gibson and Co., who negotiated bills, with fictitious names 
upon them, to the amount of nearly a million sterling a-year. The first case 
was Tatlock v. Harris, 3 T. R. 174, in which the Court of King's Bench held 
that the bona fide holder for a valuable consideration of a bill drawn payable to 
a fictitious person, and indorsed in that name by the drawer, might recover the 
amount of it in an action against the acceptor, for money paid or money had 
and received ; upon the idea, that there was an appropriation of so much money 
to be paid to the person who should become the holder of the bill. In Vere v. 
Lewis, 3 T. R. 182, decided the same day, the Court held, there was no occasion 
to prove that the defendant had received any value for -the bill, as the mere cir- 
cumstance of his acceptance was sufficient evidence of this ; and three of the 
Judges thought the plaintiff might recover on a count which stated that the bill 
was drawn payable to bearer. Minet v. Gibson, 3 T. R. 481, put this point di- 
rectly in issue, and the unanimous opinion of the Court was, that where the cir- 
cumstance of the payee being a fictitious person is known to the acceptor, the 
bm is in effect payable to bearer. Soon after, the Court of Common Pleas laid 
down the same doctrine in CoUis v. Bmmett, 1 H. Bl. 313. This decision was 
acquiesced in ; but Minet v. Gibson was carried up to the House of Lords, 1 H. 
Bl. 569. The opinions of the Judges being then taken. Eyre, C. B., and Heath, 
J., were for reversing the judgment of the Court below, and Lord Thurlow, 
Chancellor, coincided with them ; but the other Judges thinking otherwise, 
judgment was affirmed. *Parl. Cas. 8vo, ii. 48. The last case upon the r*i i qi 
subject reported is Gibson v. Hunter, 2 H. Bl. 187, 288, which came be- ^ ■' 
fore the House of Peers upon a demurrer to evidence ; and in which it was held, 
that in an action on a bill of this sort against the acceptor, to show that he was 
aware of the payee being fictitious, evidence is admissible of the circumstances 
under which he had accepted other bills payable to fictitious persons. Vide 
Tuft's case. Leach Cro. Law, 206." 



ALTHOUGH A BILL OR NOTE DOES NOT BEAR TO HAVE BEEN GRANTED 
rOR VALBE, VALUE IS PRESUMED. 

I. — WHITE V. LEDWICK. 

Feb. 8, 1785. — E. 4 Douglas, 247. E. 0. L. B. vol. 26. 

This was an action by the indorsee of a bill of exchange stgainst the 
administratrix of the drawer. 



90 ROSS ON OOMMEROIAL LAW. 

The first count of the declaration stated, that the drawer, on the 27th 
of July, 1775, according to the custom of merchants, made his certain 
bill of exchange, and directed it to the acceptor, " by which said bill, of 
exchange he required the drawee to pay to the indorser or order, on the 
27th of July, which would be in the year 1777, £450, with interest 
half-yearly, that is to say, with interest for the same at and after the 
rate of £5 for the forbearing of £100 for a year, payable half-yearly on 
account of him the said drawer." It then stated, in the usual form, the 
delivery to the indorser, the acceptance by the drawee, the indorsement 
to the plaintiff, the refusal of payment by the drawee when the bill 
became due, and notice thereof to the drawer, " by means whereof, and 
according to the said usage and custom of merchants, the said drawer 
became liable to pay the J6450 and interest to the plaintiff." 

The defendant demurred generally to this count. 

Chamlre, in support of the Demurrer, contended, that to constitute a 
bill of exchange it is necessary that it should purport to be for value re- 
r«iiQT "S'^s'^j and as that essential part *was wanting in this bill, as 
L J stated by the plaintiff, his declaration could not be maintained. He 
said, besides several authorities in the writers on general law in his favour, 
the two cases of Banbury v. Lisset, 2 Str. 1211, and Pierce v. Wheatley, 
4 Vin. 241, were in point, and that there were no decisions to the con- 
trary. In the first of those two cases three objections were made, viz., 
1, That the bill was not payable to order ; 2, That it was payable out of 
a particular fund; 3, That it was not said to be for value received. 
The Chief Justice ruled it not to be a bill of exchange. He said it 
was not in the power of parties to make what form they please pass for 
such a bill, which ought to be agreeable to the lex mercatoria, and 
thought the bill bad on the objection as to the fund. However, he left 
it to the jury, who were a special jury of merchants, and they found it 
no bill of exchange on the objection that it was not stated to be for value 
received. In like manner, in Pierce v. Wheatley, a bill which ran in 
these words, "At six weeks after date pay to B. W. or order eight 
guineas for your humble servant," was ruled by Willes, Chief Justice, 
not to be a bill of exchange within the custom of merchants; and 
though the reason why it was so held is not mentioned in Viner, where 
the case is reported, yet as it differed in nothing from the common form, 
except in the omission of the words « value received," that omission must 
have been the ground on which it was held to be bad. This question 
was agitated lately in the Court of Common Pleas, in a case of Dawkes 
V. Lord Deloraine ; but there were several other objections to the bill in 
that case besides the present, and the Court decided on the others with- 
out going into this point. [During the argument, .G-ould, Justice, men- 
tioned a case at the Old Bailey for forging a bill of exchange, tried before 
him, and where he held that the instrument was not a bill of exchange, 
not being payable to order or for value received."] 

Bower for the plaintiff. — It has been the general practice to insert 
the words "value received," and formerly it was thought necessary to 
insert them; but there are many and some old cases where the contrary 



BILLS OP EXCHANGE. 91 

has been held. In Cramlington v. Evans, 1 Show. 4, Lord Holt ex- 
pressly says, "If the *drawer mentions value received, then he is r^ionT 
chargeable at common law ; if no such mention is made, then you L J 
must come upon the custom of merchants only." In the case of Jenny 
V. Heale, as reported in 8 Modern, it appears that the want of the words 
" value received" was the only objection insisted on in the Court of 
Common Pleas, where the cause originated, on the demurrer to the de- 
claration. It was there overruled, and judgment given for the plaintiff. 
On the writ of error it was laid down, that though in the old bills of 
exchange those words were inserted, it was not now necessary. Accord- 
ingly, though the judgment was reversed, it was upon another ground, 
viz., that the note was only an order to a cashier to pay a sum out of a 
particular fund. In the two cases cited on the other side there were 
other points sufficient to ground the decision, and in the first-mentioned 
particularly it does not appear that the Chief Justice gave any opinion 
on the present question. On principle there seems to be no reason for 
inserting the words " value received." They are not necessary in a pro- 
missory note; and in Grant v. Vaughan, Wilmot, Justice, said "Bills 
of exchange are only promissory notes to pay such a sum in case the 
drawer does not." 

Chambre, in reply, observed, that the words imputed to Lord Holt 
in Cramlington v. Evans must be misreported, for that in every case the 
action on a bill of exchange must be founded on the custom of mer- 
chants. 

Lord Mansfield I wished to see if the counsel for the defendant 

could cite any authority that would be binding upon us as to this ques- 
tion, but there is none, and the objection has no foundation in reason. 
The essence of a bill of exchange is, that it is negotiable, or payable to 
order, and that it is payable generally, not out of a particular fund. 

AsHURST, Justice I am of the same opinion. The words "value 

received" are only inserted ex majori cautela, in order that the payee 
may be able to recover upon it in an action for money lent, or money had 
and received, in case the instrument should be defective in other respects 
as a bill of exchange. 

*BuLLER, Justice. — I am of the same opinion. The two cases riiiion 
cited by Mr. Chambre are only determinations at Nisi Prins. L J 
The question was argued very elaborately in the Common Pleas in the 
year 1764, though no judgment was given upon it : but it then appeared 
that the books on mercantile laws contradict one another on this point, 
and that there is nothing certain in the usage. 

Judgment for the plaintiff. 



IL— GRANT V. DA COSTA. 

Jan. 23, 1815.— E. 3 M. & S. 351. B. C. L. E. vol. 30. 

Upon a rule for entering a nonsuit, upon an alleged variance at the 
trial of this cause before Lord Ellenborough, C. J., the case was this : 



92 ROSS ON COMMERCIAL LAW. 

The plaintiff declared that one J. B. drew a bill of exchange on the de- 
fendant, by which he required him, three months after date, to pay to 
T. Gr. B. or order £315 10s. for yalue received by the said J. B., which' 
the defendant accepted, &c. The bill produced was thus : " Threes 
months after date pay to T. Gr. B. or order, J315, 10s. value rec&ived;" 
and was subscribed J. B. And it was contended that hSre was a vari- 
ance, inasmuch as « value received" did not import value received by J. 
B., but value received of J. B. by the acceptor. 

The Attorney-General and J, Parke, who showed cause, argued that 
"value received" was capable of both senses, either value received by 
the drawee of the drawer, or value received by the drawer of the payee; 
they urged, however, that the latter sense was the most reasonable, be- 
cause, as the drawee must know whether he has value of the drawer in 
his hands, it would be needless to inform him. And if the words are 
capable of both senses, it is sufficient that the declaration has adopted 
one of them. 

Park (with him Abbott), contra, maintained, that " value received" 
r#i oo-i ^^^ not necessarily mean value received by the *drawer ; for if 
L -i the bill had been payable to the drawer's own order, it would not 
have so meant, but must have meant value received by the acceptor. 
Therefore if the declaration purports to set out a bill of particular de- 
nominatiop, it is not sufficient to prove a bill which is capable of a dif- 
ferent denomination. 

Lord Ellenborough, C. J. — It appears to me that value received is 
capable of two interpretations, but the more natural one is, that the 
party who draws the bill should inform the drawee of a fact which he 
does not know, than of one of which he must be well aware. The words 
*' value received" are not at all material ; they might be wholly omitted 
in the declaration, and there are several cases to that effect. The mean- 
ing of them here is, that J. B. informs the drawee that he draws upon 
him in favour of T. G. B., because he has received value of T. Gr. B. 
To tejl him that he draws upon him, because he, the drawee, has value 
in his hands, is to tell him nothing; therefore the first is the more pro- 
bable interpretation. 

Bayley, J. — The object of inserting the words " value received" is 
to show that it is not an accommodation bill, but made on a valuable 
consideration given for it by the payee. 

Per Curiam. Kule discharged. 



Ill — SCOT v. LAING-. 

March 19, ITOT.— S. M. 1535. 



This was an action on the defender's promise to pay to the pursuer a 
bill of J30 sterling, drawn by Colin Ramsay in favour of Alexander 
Scot, upon and accepted by John Melvill. 

AUeged for the Defender.— The defender is not liable to the pursuer 
for the bill ; because, it does not bear value received of him, and so waff 



BII.LS OF EXOHANOi:. 93 

but a factory, or trust given by Bamsay to Scot to receive the money. 
In order to instruct that a bill not bearing value received imports only a 
trust in *the person it is payable to, to receive the money for the r.-inn-i 
drawer's behoof, a declaration under the hands of some Edinburgh L J 
merchants is produced, bearing, that when they draw bills payable to 
their servants, 'or any whom they trust to uplift their money, they have 
no other security for the repayment or check upon the trustee to compt, 
save that the bills do not bear value received. So that if the trustee 
should prove unfaithful, or should die before sending any letter of advice 
to the drawer or indorser that he received their money, the trust could 
not be safely proved but by the want of value received in the bills. 

Answered for the Pursuer. — We need not go for a decision in this 
matter to the precarious authority of merchants, who are divided in their 
sentiments, seeing the lords, proceeding lipon a more sure rule, viz., the 
principles of law and the opinion of authors, have once and again so- 
lemnly determined, that bills not bearing expressly "value received" of 
the creditor, do imply that value was given for them, unless redargued 
by the creditor's oath or writ. As Mr. Forbes observes in his treatise 
concerning bills of exchange, the pretence that merchants could not 
easily fix a trust upon their servants or correspondents to whom they 
make- their bills payable for their own behoof, unless it were presumed 
from the want of the words "value received," is frivolous; for if the 
trustee be honest and exact, he will immediately upon receipt of the 
drawer's money give him credit in his books, whereby the trust will be 
known whether he die or live; and if the servant or correspondent do 
not answer the trust reposed in them, the drawer or indorser has himself 
to blame for giving credit to such. Again, is it any extraordinary thing 
to see merchants and others deposit their money, without any receipt, in 
a confident's hand, to lie there till the owners have occasion to make use 
of it, or draw it out with advantage ? Do not many rich men in the 
country transmit their money to their agents at Edinburgh, to be lent 
out at a term upon security; and what have the owners of such money 
to depend on but the oath and honesty of their doers ? Besides, our law 
has privileged bills of exchange as to the way and manner of prQving 
*trust; witness the Act 1695, anent blank writs, in which bills r^t-inA-i 
are excepted. 2. If value were not presumed, though not ex- L J 
pressed, many people might be ensnared, who, by not knowing that form- 
ality, might neglect to cause insert value received in bills truly onerous. 
3. The defender having promised payment of the accepted bill to the 
pursuer, it is jus tertii to him to object trust in the person of the pur- 
suer, without instructing that he is creditor to, or represents Colin Earn- 
say, the drawer. 

The lords found, that value is presumed to have been given for the 
bill by Alexander Scot, the creditor, though it bear not value received ; 
unless the defender prove by writ or oath of the creditor that he paid no 
value. 



Apeil, 1864.— 7 



94 BOSS ON OOMMEBOIAIi lAW. 



IV BROWN'S EXECUTORS v. THOM'S REPRE- 
SENTATIVES. 

Jan. 26, 1709.— S. M. 1536. 

This was an action at the instance of the executors of William Bon- 
nar against the representatives of John Thorn, for repetition of £20 ster- 
ling, intromitted with by Mr. Thorn, conform to his receipt upon the fol- 
lowing order; — "William Dippie, please deliver to John Thorn, bearer 
hereof, twenty pound sterling, take his receipt, and this shall be your 
warrant, William Bonnar." This order, the pursuers contended, must 
be presumed to have been given to Mr. Thorn under trust to receive the 
contents for the behoof of Mr. Bonnar, because, albeit value is presumed 
to be given for bills in the ordinary known style, that presumption is 
taken off by the extraordinary tenor of this, which. First, Bears not, 
"Please to pay," but only, "Please to deliver;" and though payment 
implies right in the creditor who receives it, delivery does not, but may 
be made for causes obliging to compt, as loan, &c. Second, The drawer 
orders his correspondent to take Mr. Thom's receipt, which was needless 
for Bonnar's own security, since the simple getting up of the bill, ut 
instrumentum a^ud dehitorem, was suflScient instruction of payment by 
the merchant law; and if a receipt was needful to Dippie, he needed not 
rwioKT ^'^ order to look to his *own security. Third, It bears, "Deliver 
L J to John Thom, bearer," and not to him or his order; and it is a 
common rule, that an extraordinary clause in a writ debet aliquid ope- 
rari prceter jus commune. 

The lords assoilzied the defender : because value is presumed to have 
been giVen by Thom, unless the contrary were proved ; seeing " pay and 
deliver" are words promiscuously used in bills and bonds of borrowed 
money. And the design of taking a receipt from Thom was both to 
serve for an instruction of payment against him, and for a rule of compt- 
ing betwixt Dippie and Bonnar. 



1. Where a bill or note bears to be for value received, that expression im- 
ports value received from the payee, unless the bill is made payable to the 
drawer himself. The case of Highmore v. Primrose, 5 M. & S. 65, was an ac- 
tion of assumpsit on a bill of exchange payable to the order of the drawer him- 
self. The bill was in these terms :— " Two mouths after date pay to my order 
£29, 12«. value received." In the declaration the count described the bill as 
drawn for value received by the drawer. The defendant objected, that the 
plaintiff could not recover, on the ground that there was a variance between the 
count and the bill, as the bill itself imported value received by the drawee. 
This objection was sustained. Lord Ellenborough observed,—" Certainly when 
a man calls upon another by a bill of exchange to pay to his own order, not 
naming any payee, a sum of money for value received, he cannot be supposed 
tomean value received of some person in blank, who shaU be hereafter ascer- 
tained as indorsee. The fair import of the language is, that in calling upon the 
drawee to pay his order, he intends to put the drawee in mind of the duty which 
he owes from having received value for it. The argument, therefore, seems to 
me to be with the defendant, upon the question of variance " 

2. The case of Clayton v. Gosling, 6 B. & C. 360, was an action of assumpsit 



BILIiSOrEXOHANOE. 95 

on a promissorv note in the following form: — "On having twelve months' 
notice, we jointly and separately promise to pay Mr. John Clayton, or order, 
£200 for value received, with lawful interest. — G. Gosling, J. D. Bower." 
The defendant pleaded, that the cause of action arose *before the bank- r*i2(:-| 
ruptcy of the defendant, and that as the debt was proveable under the '- ■' 
Commission, it was now bound by the certificate granted to the bankrupt. The 
plaintiff contended that the note was not proveable under the Commission be- 
cause not payable at all events, as it depended upon the contingency of notice 
being given by the plaintiff; and because the note was not to be considered as 
conolusive evidence of debitum in presenti. The defendant answered, — The 
debt was debiium in presenti. The note is expressed to be " for value re- 
ceived." It was not a debt upon a contingency, within the meaning of the 
cases cited. In them, either the amount of the debt was not ascertained, or the 
time of payment was uncertain, and did not depend upon the will of the credi- 
tor. Here the amount to be paid was ascertained, and the creditor, by giving 
notice, might at any time fix the day of payment. Abbott, C. J. — "We have 
decided on more than one occasion, that the expression 'value received,' in a 
note, imports, ' received from the payee.' The note in question may, therefore, 
be read thus : We acknowledge to owe the payee £200, and promise to pay 
him that sum, with interest, twelve months after notice.' If so, there is not any 
contingency as to the debt, for that is admitted to be due. Nor is the time of 
payment contingent, in the strict sense of the expression ; for that means a 
time which may or may not arrive: this note was made payable at the time 
which we must suppose would arrive. But no notice was given, and therefore 
no action could be maintainable at law at the time of the bankruptcy. The 
statute 7 Geo. I. c. 31, was made to remedy such evUs, and provides for the 
proof of debts payable in future, and provides also for a rebate of interest. Can 
then, such rebate be made here? I think it may. The interest wiU cease, and 
then the effect wiU be the same as if the note had been payable at a certain 
period after date. The case, then, being free from the difficulties which might 
have occurred as to the rebate, had the note been payable without interest, I 
think it was proveable, and, consequently, that the plaintiff's demand was barred 
by the certificate." Bayley, J. — " Where it is matter of contingency whether 
the debt wiU ever be payable, or where the amount of it is uncertain, it cannot 
be proved. But here the note is expressed to be for value received, which, ac- 
cording to Highmore v. Primrose, is an acknowledgment of a debt due. The 
twelve months after notice merely applies to the time of payment, and the 
7 Geo. I. c. 31, is founded upon the distinction between debts not due and not 
payable. If interest had not been payable from the date but from the notice, 
then, as notice had not been given at the time of the bankruptcy, the amount of 
the sum to be paid might have been doubtful; but as interest is payable from the 
*date of the note, no such difficulty arises. For these reasons it appears r^^, qiri 
to me that the case falls within the words and the spirit of the 7 Geo. 1.'- -■ 
c. 31, and that the debt was proveable." 



IN ENGLAND, IN AN ACTION ON A BILL OR NOTE, THE PRESUMPTION OP 
A LEGAL CONSIDERATION MAY BE REBUTTED, AND THE WANT OP CON- 
SIDERATION IS A GOOD DEPENCE AGAINST THE PLAINTIFF IF NEITHER 
HE NOR ANT INTERMEDIATE HOLDER GAVE VALUE FOR IT J BUT EX- 
CEPT WHERE THE BILL HAS BEEN OBTAINED THROUGH FRAUD, OB HAS 
BEEN STOLEN OR LOST, OB HAS BEEN GRANTED FOR AN ILLEGAL CON- 
SIDERATION, THE DEFENDANT IS NOT BOUND TO PROVE THAT HE GAVE 
VALUE FOR IT. 

I.— HOLLIDAY V. ATKINSON. 

Easter Term, 1826.— E. J5 B. & 0. 501. B. 0. L. E. vol. 11. 
Assumpsit on a promissory note given by one deceased to the plaitt- 



96 KOSS ON COMMERCIAL lAW. 

tiff for £100, dated July 19, 1821, payable six months after date, and 
expressed to be for value received. At the trial before HuUook, B., at 
the Carlisle summer assizes, 1825, it appeared that the plaintiff at the 
time when the note was made was, only nine years old. The deceased 
was then in an imbecile state, and died a few months after. It appeared 
that the deceased was intimate with the father, but no evidence of consi- 
deration was given. The learned Judge told the jury, that the note 
being for value received, was primS, facie evidence of some legal consid- 
eration. That it was not necessary to prove the consideration, but the 
defendant should have disproved it. That many good considerations 
might have existed, and that affection towards the plaintiff, or gratitude, 
to his father, or an intention to avoid the legacy duty, would suffice. 
But that if they thought fraud had been practised, or the maker did not 
know what he was doing, they ought to find for the defendants. A ver- 
dict having been found for the plaintiff, a rule nisi for a new trial was 
obtained in Michaelmas term-, against which 

Scarlett and Patteson showed cause. — The only question made at the 
r*1 9Sn '"^^^^ ^^® respecting the competency of the deceased *to make the 
L -I note. There was no evidence to impeach the consideration ; it 
was therefore unnecessary for the plaintiff to prove it, partieularly as the 
note was expressed to be for value received, which raises a presumption 
that a good consideration was given. Then with respect to the observa- 
tions of the learned Judge, Woodbridge v. Spooner, 3 B. & A. 233, is a 
case where a note was given " for value received and his kindness to me," 
and the consideration must have been held sufficient, for the plaintiff 
recovered without proof of any actual consideration given. In Lee v. 
Muggeridge, 5 Taunt. 36, a moral consideration was held sufficient. In 
Tate V. Hilbert, 2 Ves. jun. ill. Lord Loughborough would not decide 
that a note was invalid which was delivered as a gift Here the motive 
might be to avoid the legacy duty. 

Brougham and Wightman, contra There is no doubt that a consid- 
eration might have been presumed in this case, and had the learned Judge 
left it to the jury with that observation only, there would not have been 
any ground for this application. But he pointed out as good considera- 
tions, affection towards the child or gratitude to the father, and it is im- 
possible to say that the verdict was not founded upon the supposition, 
that one or other of those considerations was the real one for giving the 
note. 

Abbott, C. J — I think that this case must be sent to a new trial. I 
agree that where a note is expressed to be for value received, that raises 
a presumption of a legal consideration sufficient to sustain the promise; 
but that is a presumption only, and may be rebutted. Now, we find that 
this note was given to a boy only nine years old, whose father was living, 
and that the donor was in a state of imbecility, and not far from his 
death. It then became a question for the jury, whether the note was 
given upon any legal consideration, and I think that the direction given 
to them as to the sufficiency of gratitude to the father or affection to the 
son was improper. As at present advised, I should also think that the 
intention to avoid the legacy duty would not be sufficient, for then the 



BILLS OF EXCHANGE. 97 

note would not be payable until after the donor's deatb, and a r^-ioq-i 
promissory note *is not good as a donatio mortis causa. But if L J 
a second verdict should be founded on the latter consideration, the ques- 
tion may be put upon the record. Bule absolute. 



II — HEATH V. SANSOM AND EVANS. 

April 27, 1831 ^E. 2 B. & A. 291. E. C. L. E. vol. 22. 

Assumpsit by the plaintiff as indorsee against the defendants as mak- 
ers of a promissory note. Plea, by the defendant Evans, the general 
issue. Sansom suffered judgment by default. 

At the trial before Lord Tenterden, C. J., the following facts ap- 
peared : — In July, 1829, when the note in question was drawn, Sansom 
and Evans were, and had for a short time been, partners in some alum 
works at Bristol, which they carried on under the style and firm of Philip 
Sansom and Co. During the same period, and for some years before, 
Sansom had been a partner in the Droitwich Patent Salt Company, a firm 
composed of several persons carrying on the salt trade at Bristol and 
other places. Sansom had been authorized to act and receive moneys on 
behalf of the Company, as their agent ; but in June, 1829, and from 
that time forth, he was no longer permitted to do so. He was still a 
partner, however, when this action was brought. In July, 1829, one of 
the auditors of the Droitwich Salt Company called upon Sansom for the 
sum of £300, which he owed the firm, and he, to answer this demand, 
gave the note on which the present action was brought, for £3 10, bearing 
date July 1, 1829, signed Philip Sansom and Co., payable at the Droit- 
wich Patent Salt Company, or order, two months after date, value re- 
ceived, at the alum works, Bridewell Lane. This note the Company in- 
dorsed to the plaintiff. The alum works were closed, and the partnership 
in them dissolved, in August, 1829. It did not appear that anything 
had been due from this concern to the Droitwich Company, nor was it 
shown that the note had been indorsed for any valuable consideration : 
*but no notice had been given to the plaintiff to prove the con- j-^-. nn-, 
sideration for the indorsement. The Droitwich Company was L J 
solvent at the time when this action was brought. These facts were 
proved by the cross-examination of the plaintiff's witnesses. 

It was contended, on behalf of the defendant Evans, that this note, 
made in the names of Sansom and Co., appeared to have been given by 
Sansom for his own private debt ; that this was a fraud within the cog- 
nizance of the Droitwich Company, inasmuch as the knowledge of San- 
som, their partner, was their knowledge ; and that, under these circum- 
stances, the indorsee, not having proved any valuable consideration given 
by him for the indorsement, had no right to recover. On the other side, 
it was contended, that in the absence of notice to prove the consideration, 
this defence was inadmissible. A verdict was found for the plaintiff, but 
leave given to move to enter a nonsuit ; and a rule nisi having been ob- 
tained accordingly, — 



98 BOSS ON COMMERCIAL LAW. 

Sir James Scarlett and Hoggins now showed cause.— Before the 
plaintiff was called upon to prove consideration, it was incumbent on the 
other party to make out some case of fraud or misconduct in obtaining 
the note, sufficient to require that answer. It is not to be presumed on 
the facts stated at the trial, that the note was not given for money really 
due from Philip Sansom and Co. to the Droitwich Company ; on the 
contrary, it is consistent with the evidence that Sansom may have used 
the Company's money in making payments at the alum works. And 
assuming that there was a debt between the Droitwich Company and San- 
som and Co., the argument that Sansom's knowledge, as to the partioulax 
occasion on which the note was given, was the knowledge of the Company, 
becomes merely a technical objection, and ought not to prevail against 
the claim of the plaintiff, who must, prima facie, be considered an indorsee 
for value. At any rate, where a defence is contemplated on the ground 
of fraud in obtaining the note, the plaintiff ought to have notice to prove 
the consideration, Paterson v. Hardacre, 34 Taunt, 114. [Littledale, J. 
— That rule prevailed many years ago, but the practice is otherwise now.] 
pji5^„,-, *£ompas, Serjt. and Ball contra. — Even if the practice were 
L J still as it is laid down in Paterson v. Hardacre, this is not a case 
where notice would be necessary ; for the defect in the Company's title 
on the note appears by the plaintiff's own evidence. It passed as undis- 
puted at the trial that the note was given by Sansom for a debt of his 
own; and where a note is given, or bill accepted, by a partner under 
such circumstances, with the knowledge of the payee or drawer, such 
note or bill is fraudulent and void as against the other partner. Wells v. 
Masterman, 2 Esp. 731, Shirreff v. Wilks, 1 East, 48; the payee or 
drawer could not recover upon it, nor can an indorsee, without showing 
that he gave a valuable consideration. In Duncan v. Scott, 1 Camp. 100, 
where it appeared on the plaintiff's case that the bill on which the action 
was brought had been given under duress. Lord Ellenborough held 
that it lay on the plaintiff, who sued as indorsee, to give some proof of 
consideration; and, failing to do so, he was nonsuited. Eees v. The Mar- 
quis of Headfort (where the bill was obtained by fraud) was a similar 
decision. In Grant v. Hawkes, 2 Camp. 574, Chitty, 42, Lord Ellen- 
borough said, — "An indorsee may recover on a bill against partners in 
a concern, though the drawing or accepting were contrary to agreement 
between them, and by one of the partners in fraud of the rest ; but then 
the indorsee must show that he gave value." In Thomas v. Newton> 
2 Camp. 606, Lord Tenderden says, — " If the defendant shows that there 
was originally no consideration for the bill, that throws it on the plain- 
tiff" (the indorsee) "to show that he gave value for it," or that value 
was given by the previous indorser. The same rule has prevailed in the 
case of bills which have been stolen or lost. In Gill v. Cubitt, 3 B. & 
C. 466, [10 E. C. L. E.,] where a stolen bill had come to the hands of a 
broker, who discounted it and then sued the acceptor, it was held to be 
incumbent on the plaintiff to show, not only that he gave good considera- 
tion, but that he took the bill bong, fide. In the present ease, a suspi- 
cion is thrown upon the indorsee, not only by the original fraud in the 
making of the note, but also by the circumstance of his using the mak- 



BILLS OF EXCHANGE. 99 

ers rather than the indorsers, who were a well-known and solvent part- 
nership. 

Lord Tenderden, C. J. — It is clear on the facts of the case, j-^, „„-, 
*that this note was given in consideration of money due from ^ -• 
Sansom alone to the Droitwich Salt Company, in which he himself was 
a partner; and we are all agreed that the Company could not have main- 
tained an action against Evans. This is an action hy the Company's in- 
dorsee, that party having elected to sue the makers of the note, instead 
of the Droitwich Company, from whom he received it, who are solvent, 
and of whom one at least, the indorser, must he known to the plaintiff. 
The question then is, whether, in order to succeed in this action against 
the defendant Evans, he was bound, under the circumstances of the case, 
to prove a consideration for the indorsement. According to the more 
recent practice, I think it was incumbent on him to do so ; and this is a 
stronger case than the ordinary one, in which indorsees have been put to 
prove value given by reason of the circumstances under which an accept- 
ance or note was obtained, because here the indorsee chooses to bring his 
action against makers, who are unknown to him, rather than sue the in- 
dorsers, whom he knows, and from whom he took the note. The rule for 
a new trial must be absolute. 

LiTTLEDALE, J. — I am of Opinion that the Droitwich Company could 
not have recovered on this note, and consequently that the present plaintiff 
cannot. It has been frequently held that where a note or acceptance of 
a bill has been obtained by fraud, loss out of the owner's hands, or du- 
ress, the indorsee is bound to show that he gave value, and in some in- 
stances even that he became holder bona fide, and not under circumstances 
of suspicion. It may be laid down as a general rule, that if the note or 
acceptance were taken under such circumstances that the indorser him- 
self could not recover, the indorsee must prove that he became so for a 
good consideration, though no notice be given him to produce such evi- 
dence. There is no more hardship in the necessity of proving considera- 
tion here than in ordinary actions on simple contract, where the plaintiff 
must be prepared to show a consideration if necessary, though in the 
great majority of instances no such necessity arises. It may be said that 
the rule now laid down is inconvenient, as restraining the negotiability of 
notes and *bills; but this is fully counterbalanced by the inoon- r^-iooT 
venience which would arise on the other hand, if a party who L J 
could not himself sue on a note or acceptance, could put it into the hands 
of a third person, and in consequence of such transfer, the proof of value 
given should be dispensed with. The present case is stronger than the 
ordinary one, of a bill accepted for accommodation, because here some 
little suspicion arises from the note being indorsed over by the Droitwich 
Company, and the action then brought against the maker. I think, 
therefore, the rule ought to be absolute. 

Pabee, J. — I am of the same opinion on the special circumstances of 
this case ; but I have always understood that an indorsement must be 
taken, primS, facie, to have been given for value, and that the proof, at 
least of circumstances tending to throw suspicion on such indorsement, 
lies on the party disputing its validity before the indorsee can be called 



100 KOSS ON COMMEKCIAL LAW. 

upon to prove that he gave value for the bill. This doctrine appears to me 
to be correctly laid down by Eyre, C. J., in Collins v. Martin, 1 B. & P. 648. 
When the note or acceptance has been obtained by felony, by fraud, or 
by duress, it has been usual to require proof of valuable consideration 
on the part of the indorsee ; and I do not dispute the propriety of that 
usage, as any one of those facts raises some suspicion of the title of the 
holder. But I am by no means satisfied that the same rule can be ap- 
plied to all cases where an acceptance or note has been given without con- 
sideration. I think this is a very important question. It is difBcult to 
reconcile the recent practice (for it is only recent) with principle j for 
the simple fact of want of consideration between the acceptor and drawer, 
or maker and payee, affords no inference that the holder received the bill 
or note malS, fide, or without consideration. It is, besides, a practice 
likely to produce great increase of expense, as, in every instance, a plain- 
tiff, who is indorsee, can hardly be safe, without being prepared to prove, 
as to some one at least of the indorsements, that value was given for it; 
and this inconvenience may outweigh that of casting upon the defendant 
the burden of making out a case of suspicion against the indorsee before 
proof of consideration can be required from him. But it is sufficient 
r*1 <?4.T *^°' *^® decision of this case to say, that its circumstances were 
L -| in themselves such as called upon the plaintiff to prove that 
value was given for the indorsement. For the Droitwich Company could 
not have sued the defendant Evans on this note. It must be taken to 
have been given to them by Sansom in fraud of Evans ; and when we 
find the plaintiff suing him, instead of the Droitwich Company, who are 
solvent, it is impossible not to suspect that the note has been indorsed 
to the plaintiffs to enable them to sue Evans, and not bona fide for a 
valuable consideration. This creates a suspicion which the plaintiff 
ought to clear up ; and on that ground I am of opinion that a nonsuit 
should be entered. 

Patteson, J. — As at present advised, I think the general rule of 
practice on this subject has been correctly stated, and that where a note 
or acceptance has been given under such circumstances that the original 
payee could not recover on it, the indorsee may fairly be called upon to 
show how it came to his hands, and is not entitled to a previous notice. 
And, therefore, independently of the circumstances of suspicion in this 
ease, I should think, upon the point of practice alone, this rule ought to 
be made absolute. Bule absolute. 



Ill — MILLS V. BAEBER. 

Easter Term, 1836. — E. I M. & W. 425. 
Assumpsit against the acceptor of a bill of exchange drawn by one 
Samuel Barber upon the defendant for the sum of 100?., payable two 
months after date to the order of the drawer, and by him indorsed to the 
plaintiff. The defendant pleaded, that he accepted the bill at the request 
and for the accommodation of the said Samuel Barber, and that the said 
Samuel Barber did not give, nor did he the defendant have or receive 



BIIiLS OP EXOHANQE. 101 

any value or consideration for his the defendant's *aocepting or r^-iocT 
paying the said bill of exchange ; that the said Samuel Barber L J 
indorsed the said bill to the plaintiff without any value or consideration, 
and that the said Samuel Barber and the said plaintiff have always re- 
spectively held the said bill without any value or consideration. Verifi- 
cation Beplication, that the said Samuel Barber indorsed the said bill 

of exchange to the plaintiff for a good and valuable consideration ; con- 
cluding to the country. 

At the trial before Alderson, B., a question arose whether the plain- 
tiff was bound to prove consideration for the bill, or whether the defen- 
dant was not bound to show the want of consideration; the learned 
judge held the latter, and the defendant not being prepared to prove 
the want of consideration, he directed a verdict to be entered for the 
plaintiff. 

Humfrey, in the same term, obtained a rule to show cause why there 
should not be a new trial, on the ground that the onus lay upon the 
plaintiff, relying on Simpson v. Clarke, where Lord Abinger, C. B., inti- 
mated an opinion in the course of his judgment, that, where the plead- 
ings are such as in the present case, it is incumbent upon the plaintiff 
to prove the consideration. Against this rule on a former day in this 
term, 

Theobald showed cause. — ^The question arises, from the admission on 
the record that this was an accommodation bill, whether the plaintiff 
was bound to prove consideration, or whether the defendant ought to 
have shown the want of it. The decision of the learned judge at the 
trial was perfectly right j and it was not incumbent on the plaintiff to 
prove consideration in the first instance. Undoubtedly, the replication 
does allege affirmatively that the plaintiff gave valuable consideration for 
the indorsement, but he was not therefore bound to prove it in the first 
instance. In Low v. Burrows, where to an action on a bill of exchange 
by the drawer against the acceptor, the defender pleaded that there was 
no consideration for the acceptance ; and the plaintiff replied that there 
was consideration for the acceptance, to wit, the sale and delivery of 
goods, concluding to the country, as in the present case : it was held 
that the plaintiff was not bound to prove the consideration *al- r*iqe-i 
leged, and that it lay on the defendant to show want of conside- L -■ 
ration. [Alderson, B. — The replication is in the affirmative, but it is 
in answer to a negative. Upon the question as to who is to begin, is it 
not the proper test to examine whether, if the particular allegation be 
struck out of the plea, there will or will not be a defence to the action ? 
It is immaterial whether the allegation be in the affirmative or negative. 
Parke, B. — There is no difficulty on that part of the case : the burden 
of proof is certainly on the defendant. Lord Abinqee, C. B — The 
question is, Whether, supposing the defendant to have proved those 
facts which the replication admits, it did not become incumbent on the 
plaintiff to prove his title to sue by showing that he was not the mere 
agent of the party who had received the bill without consideration ?] 
The plaintiff is not compelled to do so, unless the defendant has shown 
some fraud or some defect of that nature in the plaintiff's title. In 



102 ROSS ON OOMMBROIAIi LAW. 

Bayley on Bills it is said,—" In many cases the plaintiff is compellable 
to prove that either he or some preceding party took the bill or note 
bona fide, and for Value. As in case of a bill or note originally given 
without consideration, and whilst the person giving it was under duress, 
or in case of a bill or note obtained by fraud, or in case of a transfer by 
delivery by a person not entitled to make it, as in the instance of bills 
or notes which have been stolen." It is not there said that the mere 
fact of the bill being an accommodation bill throws the proof of value on 
the holder, but only in cases where there is some fraud, or something of 
a similar nature. Fentum v. Peacock, 5 Taunt, 192, will probably be 
referred to, to show that the practice in actions upon accommodation bills 
is for the plaintiff to prove that he gave value. But that was not the 
point decided in that case, for there it was quite immaterial as respected 
the decision whether the plaintiff had given consideration for the bill or 
not. An accommodation bill cannot be considered to be like the case of 
a fraudulent transfer. [Paeke, B.— It is rather a fraud upon the holder 
than the acceptor. Alderson, B.— In Percival v. Frampton, 2 C. M. 
and E. 183, Parke, B., says, "The only fact admitted on the pleadings 
is, that the indorsement was for the accommodation of the maker, but 
that raises no inference that *the plaintiffs were holders without 
L ^^'1 consideration." The object of an accommodation bill is to enable 
the drawer to raise money, and therefore the inference is the other way. 
Lord Abinqer, C. B. — The difficulty I have felt is to compel the defen- 
dant to give evidence of a transaction with which he has no privity.] 
He can do that which it is said the plaintiff can do, namely, call the 
party who transferred it. [Parke, B. — A bill of exchange primS. facie 
imports consideration, and it always struck me that some suspicion must 
be thrown on the plaintiff's title in order to rebut that. The mere 
giving of a notice requiring the plaintiff to prove consideration was held 
by Lord EUenborough, in Reynolds v. Chettle, 2 Camp. 596, to be in- 
sufficient to compel the plaintiff to do so. In Thomas v. Newton, 2 Car. 
& P. 606, the plaintiff's title was impeached. In Low v. Chifney, 1 
Bing. N. C. 267; S. C. 1 Scott, 95, the Court of Common Pleas agreed 
to this doctrine. The defendant not having impeached the title of the 
plaintiff to the bill, nor shown any fraud, or cast any suspicion upon it, 
is, in my opinion, entitled to retain his verdict.] 

Humfrey, contra The simple question is, "Whether, when it is ad- 
mitted on the pleadings that as between the original parties this is an 
accommodation bill, and accepted without consideration, the plaintiff is 
not bound to prove that he gave value for it, according to the decision of 
the Court of King's Bench, by a majority of the Judges, in Heath v. 

Sansom, 2 B. & Adol. 291. [Parke, B The decision of this Court 

in Percival v. Frampton, 2 C. M. & R. 180, was to the contrary.] It 
is there said, that, in the case of an accommodation bill, it may be pre- 
sumed that value has been obtained for it ; but that where a bill has 
been obtained by fraud, or has been lost or stolen, the inference might 
arise that the holder had not given full consideration for it. It is how- 
ever, difficult to see why the holder of a bill which may have passed 
through many hands since the fraud or loss, is not quite as likely to be a 



BILLS OP EXCHANGE. 103 

holder for value, as when it was originally an accommodation bill. The 
principle which requires the plaintiff to prove consideration in the one 
case is equally applicable to the other ; assuming that a party who ob- 
tains a bill by fraud would part *with it for little value, the same ^^^ „o^ 
reasoning applies to accommodation bills, where the party gets the L -1 
bill for nothing. It is important that some clear rule should be laid 
down, because since the new rules the question comes before the Court 
every day. The authorities beiffg conflicting, it will be safer to adhere to 
the decision of the Court of^ King's Bench in Health v. Sansom, and 
that is the most convenient rule to adopt. It must be admitted that in 
Lewis V. Lady Hyde Parker, Williams, J., at Nisi Prius, ruled ac- 
cording to the decision of this Court in Percival v. Frampton, and the 
Court of King's Bench in. this term decided that he was right, on the 
authority of that case ; but it is submitted that that decision was errone- 
ous. [BoLLAND, B In Wyatt v. Bulmer, 2 Esp. Eep. 538, Eyre, 0. 

J., held, that the circumstance of the original transaction being contrary 
to law, (provided the security was not declared to be void by law,) did not, 
where the action was by a remote indorsee, necessarily called upon him 
to prove the consideration j and that if the defendant meant to call upon 
the holder to prove consideration, it would be necessary to implicate him 
some way in the transaction, or to show some degree of privity respect- 
ing it.] Cur. adv. vult. 
The judgment of the Court was now delivered by 

Lord Abinqee, C. B This was an action against the acceptor of a 

bill of exchange, in which the defendant had pleaded that the bill of 
exchange, was given without any consideration, and for the accommoda- 
tion of the drawer, and indorsed to the plaintiff without value; to which 
the plaintiff replied, that it was indorsed to him for a valuable considera- 
tion. At the trial the plaintiff stood upon his right, contending that the 
possession of the bill itself was prima facie evidence of consideration; 
the defendant insisted that it was cast upon the plaintiff to prove affirma- 
tively that he did give value for the bill. Neither party choosing to act, 
the learned Judge took it upon himself, and directed the verdict to 
be entered for the plaintiff. The question is, Whether he was right 
in so doing ? It is rather a question of practice than of *law. j-^, „„-■ 
No doubt the rule of law is, that, where a plaintiff has not given <- ^ 
consideration for a bill of exchange, for which no consideration has 
been previously obtained, he cannot recover upon it. But the doubt 
is as to which party is required to give evidence. Cases were cited 
to show the practice to have been for the plaintiff to prove consid- 
eration given by him. I must own, that, as far as my experience has 
gone, that was the course. I never have known the point mooted ex- 
cept in certain cases. A practice had grown up of giving a notice to the 
plaintiff calling upon him to prove consideration, and it was a very gen- 
eral course, where such a notice had been given, for the plaintiff to do 
80 in the first instance. But I have known cases where the plaintiff has 
refused at first, and then the defendant having proved that the bill was 
an accommodation bill, the plaintiff has in reply given proof of his being 
a bolder for value. The Judges have taken this question into considr 



104 BOSS ON OOMMESOIAL IiAW. 

deration, it having become mucli more important to settle it, than the 
particular manner in which it should be settled. The Court of King's 
Bench has been consulted; and Littledale, J., and Patterson, J., have 
withdrawn the opinions which they expressed in the case of Heath v. 
Sansom. In Sampson v. Clarke, undoubtedly, I stated what I now state, 
that the practice was for the holder to prove that he gave value for the 
bill. I cannot say that I have departed from that opinion without some 
consideration of the public convenience. In Simpson v. Clarke, I ex- 
pressly stated that I did not decide the case upon this point, and I said 
it was not intended to determine the question. It is impossible to read 
my judgment in that case without preceiving that I abstained from de- 
ciding it. I think I made a distinction between bills given for accom- 
modation only, and cases of fraud. There is, indeed, a substantial dis- 
tinction between them, inasmuch as in the former case it is to be pre- 
sumed that money has been obtained upon the bill. If a man comes 
into Court without any suspicion of fraud, but only as the holder of an 
accommodation bill, it may fairly be presumed that he is a holder for 
value. The proof of its being an accommodation bill is no evidence of 
the want of consideration in the holder. If the defendant says, I lent 
my name to the drawer for the purpose of his raising money upon the 
r*1401 ^'^'' **''^ probability is, that money was obtained upon the bill. 
■- -I Unless, therefore, the bill be connected with some fraud, and a 
suspicion of a fraud be raised from its being shown that something has 
been done with it of an illegal nature, as that it has been clandestinely 
taken away, or has been lost or stolen, in which cases the holder must 
show that he gave value for it, the onus proband! is cast upon the de- 
fendant. The decision of the present case requires only to lay down this 
rule, that, where there is no fraud, nor any suspicion of fraud, but the 
simple fact is, that the defendant received no consideration for his ac- 
ceptance, the plaintiff is not called upon to prove that he gave value for 
the bill. That seems to be the opinion generally prevailing among the 
Judges. In this case, the onus probandi lay on the defendant, and he 
ought to have gone farther. But, under the circumstances of the case, 
the defendant may have a new trial on payment of costs. 



_ I. If a man seek to enforce a simple contrct, he must in pleading aver that 
it was made on good consideration, and must substantiate that allegation by 
proof. But to this rule, bills and notes are an exception. It is never neces- 
sary to aver consideration for any engagement in a bill or note, or to prove the 
existence of such consideration, unless a presumption against it be raised by the 
evidence of the adverse party, or unless it appear that injustice will be done to 
the defendant, if the plaintiff recover. In the case of simple contracts, the law 
presumes there was no consideration till a consideration appear : in the case of 
contracts on bills or notes, a consideration is presumed tiU the contrarv appear, 
or atleast appear probable. Byles on Bills, p. 92. 

2. In the case of Collins v. Martin, 1 Bos. & Pul. 651, Chief Justice Byre 
observed, "No evidence of want of consideration, or other ground, to impeach 
the apparent value received, was ever admitted in a case between an acceptor 
or drawer, and a third person holding the bill for value, and the rule is so strict 
that It will be presumed that he does hold for value until the contrary appear ; 
the onus probandi lies on the defendant. If it can be proved that the holdei 



BILI<8 OF EXCHANGE. 105 

gave no value for the bill, then indeed he is in privity witli the first holder, and 
will be *affected by everything which would affect such first holder, r^j, ., -i 
This all proceeds upon the argumentum ad homi.ium ; it is saying, you <■ ■' 
have the title but you shall not be heard in a court of justice, to enforce it 
against good faith and conscience. For the purpose of rendering bills of ex- 
change negotiable, the right of property in them passes with the bills. Every 
holder with the bills takes the property, and his title is stamped upon the bills 
themselves. The property and the possession are inseparable. This was neces- 
sary to make them negotiable, and in this respect they differ essentially from 
foods, in which the property and possession may be in different persons." In 
laly V. Lane, 2 Atk. 182, Lord Hardwicke observed, — " Where there is a nego- 
tiable note, and it comes into the hands of a third or fourth indorsee, though 
some of the former indorsees might pay a valuable consideration, yet if the last 
indorsee give money for it, it is a good note as to him, unless there should be 
some fraud or equity against him appearing in the case." 

3. The case of Jeffries v. Austin, 1 Strange, 673, was an action upon a pro- 
missory note brought against the maker by the payee. Chief Justice Byre let 
the defendant in to show that the note was delivered, in the nature of an escrow, 
viz., as a reward in case the plaintiff procured the defendant to be restored to 
an office ; and it having been proved that the plaintiff did not effect this, there 
was a verdict for the defendant. 

4. The ease of Wiffenv. Roberts, 1 Espinasse, 261, was an action of assump- 
sit by an indorsee against the drawer of a bill of exchange. The bill was 
drawn by the defendant in favour of Thomas Ould or order, on Thomas Yates, 
for £86, payable three months after date. Yates accepted it, but did not pay 
it ; the defendant was therefore sued as drawer on, his default. The defence 
was, that the plaintiff, the indorsee, knew that the bill was an accommodation 
one between Yates and the defendant, and that he had not paid the full value 
for it. On the cross-examination of the first witness called for the plaintiff, 
it was proved that the bill was really an accommodation bill, and that it was 
known by the plaintiff to be so, and that he, in fact, had given only £29 for it. 
Lord Kenyon observed, — " Where a bill of exchange is given for money really 
due from the drawee to the drawer, or drawn in the regular course of business, 
in such case the indorsee, though he has not given to the indorser the full 
amount of the bill, yet may recover the whole, and be the holder of the over- 
plus above the sum he has really paid to the use of the indorser ; but where the 
Dill is an accommodation one, and that known to the indorsee, and he pays but 
part of the amount, in such case he can only recover the sum he has actually 
paid for the bill ; and if the plaintiff in this *case was entitled to reco- r^-. . q-i 
ver, he could only do it to the amount of £29, the sum he really paid ^ J 
for it." 

6. The case of Smith v. Knox, 1 Esp. 46, was an action of assumpsit on a 
bill of exchange brought by an indorsee against the acceptor. The plaintiff 
proved the handwriting of the several parties to the bill, and there rested hia 
case. The defendant objected that the bill was accepted by him without any 
consideration. Lord Eldon observed — " If a person gives a bill of exchange 
for a particular purpose, and that is known to the party who takes the bill, as, 
for example, if to answer a particular demand, then the party taking the bill 
cannot apply it to a different purpose ; but where a bill is given under no such 
restriction, but given merely for the accommodation of the drawer or payee, 
and that is sent into the world, it is no answer to an action brought on that bill, 
that the defendant, the acceptor, accepted it for the accommodation of the 
drawer, and that that fact was known to the holder, In such case, the holder, 
if he give a bona fide consideration for it, is entitled to recover the amount, 
though he had full knowledge of the transaction." 

6. The partial failure of the consideration will constitute no defence to an 
action on a bill or note if the part to be deducted is unliquidated. In such a 
case the defendant is left to recover the difference in damages in a cross action. 
The case of Solomon v. Turner, 1 Starkie, 61, was an action of assumpsit on a 
promissory note made by the defendant, payable to the plaintiff. The defend- 
ant proposed to prove that the note had been given as a security for the 



106 BOSS ON OOMMEROIAL LAW. 

price of certain pictures sold by the plaintiff to the defendant, and which price 
infinitely exceeded their real value. The plaintiff objected that it was not com- 
petent to give in evidence the inadequacy of the consideration for which the 
note was given, and insisted upon the distinction between the want of consider- 
ation and a, partial failure of consideration. Lord BUenborough observed,-* 
« I will not admit the evidence for the purpose of reducing the damage, by 
showing that the pictures were of an inferior value ; but if you can, by the ina- 
dequacy of the value and other circumstances prove fraud on the part of the 
plaintiff so as to show that there was no contract at all, the evidence will be 
admissible. If it fall short of that, it will be unavailable." The defendant 
having failed to give such proof, the plaintiff had a verdict. 

1. The case of Morgan v. Richardson, 1 Camp. 40, was an action against the 
acceptor of a bill of exchange at the suit of the drawer, the bill being payable 
to his own order. The defence was, that the bill had been accepted for the 
price of some hams bought by the defendant from the plaintiff, to be sent to 
the Bast Indies, and that they had turned out so very bad that they were almost 
[-^^.„1 quite unmarketable. The sum for which *they were actually sold was 
L J paid into Court. Lord BUenborough held, "that though where the con- 
sideration of a bill of exchange fails entirely, this will be a sufficient defence 
to an action upon it by the original party, it is no defence to such an action 
that the consideration fails partially, but that under such circumstances the 
giver of the bill must take his remedy by an action against the person to whom 
it was given." The direction of Lord BUenborough was confirmed by the 
Court of King's Bench, 2 Camp. 346. In the subsequent case of Tye v. 
Gwynne, 2 Camp. 346, Lord BUenborough observed, — "Sitting here, I shaU 
certainly adhere to the judgment of the Court in Morgan v. Richardson. There 
is a difference between want of consideration and failure of consideration, 
The former may be given in evidence to reduce the damages ; the latter cannot, 
but furnishes a distinct and independent cause of action." 

8. The case of Jones v. Hibbert, 2 Starkie, 304, was an action by an indorsee 
against the acceptor of a bill for £415, \'ls. &d. The defendant had accepted 
the bill for the accommodation of the drawer, by whom it had been indorsed to 
the plaintiffs, who were his bankers. On the drawer's bankruptcy the plaintiffs 
were indebted to him in the amount of £150, which had been recovered by the 
assignees. The defendant contended that the plaintiffs were not entitled to 
recover more than £265, 19s. 8c?., which was the sum really due to them as 
between them and the drawer. The plaintiffs contended that they were entitled 
to recover the whole amount of the bill, since they were liable to the assignees 
of the drawer for the balance of £150 in, favour of the drawer at the time of the 
bankruptcy. Bayley, J., was of opinion that the proper view of considering 
the case was, to lay the bankruptcy of PhiUips and Co. out of the question, 
since their assignees could not stand in a better situation than the bankrupts 
themselves. According to this view of the case, the plaintiffs could not recover 
more than £265, 19«. id., since that was the balance really due, as between the 
plaintiffs and Phillips and Co. If the plaintiffs had been entitled to recover the 
whole, the defendant would have been entitled to recover the amount against 
PhiUips and Co., and the latter again would have recovered the difference from 
the plaintiffs. To prevent circuity of action, the plaintiffs could have recovered 
no more than the balance due as between them and Phillips and Co. Upon 
this view of the case he was of opinion that the plaintiffs were not entitled to 
receive more than the balance. 

9. The case of Duncan v. Scott, 1 Camp. 100, was an action of assumpsit on 
a foreign biU of exchange brought by the indorsee against the acceptor. It 
appeared in evidence that the defendant had been compeUed to put his name 
to the biU while a prisoner and under the threat of death. The defendant 
r*1441 *°bj^^*®'i *^^* ^^^ plaintiff had not proved himself to be holder of the biU 
L J for a valuable consideration, and argued that a party suing on a biU 
granted under such circumstances must show how he came by it, that he was 
an innocent holder of the bill, and that he gave fuU value for it to the iudorser. 
Lord BUenborough held that the defendant notJgiaving been a free a-^ent when 
he drew the bUl, it was incumbent upon the plaktiff to give some e^dence of 



BILLS OP EXOHANOE. 107 

consideration, and tMs not having been done, he directed a nonsuit. The case 
of Rees v. Marquis of Headfort, 2 Camp. 574, was an action against the 
acceptor of a bill of exchange. It appeared in evidence that the drawer had 
never received any consideration for the bill, and had been tricked out of it by 
means of fraud. Lord Ellenborough held that on this ground the plaintiff was 
bound to prove what consideration he gave for it, and as he was not prepared 
to do so he directed a nonsuit. 



IN SCOTLAND THE WANT OP VALUE CAN ONLY BE PKOVEB BY THE WRIT 
OR OATH OP THE PURSUER AND THE INTERMEDIATE HOLDERS. 

WALLACE V. BAEKIE. 

Nov. 29, ITeS.— S. M. 1484. 

James Barrie, junior, accepted a bill for £25 sterling, drawn on 
him by James and John Wallace, payable three months after date, and 
bearing to have been granted for "value received in flax." It was after- 
wards indorsed by the drawers, and by them discounted with the branch 
of the Dundee Bank at Forfar. 

The acceptor died before the bill became due, and it was retired by 
the drawers, who soon after brought an action for repayment against 
James Barrie, senior, the acceptor's father, as representing his son. 

Barrie stated in defence, first, That although the bill bore to have 
been granted for value in a specific commodity, no value of any kind 
had been received ; and that therefore it was void, as containing a false- 
hood in gremio. 

Second, That although his son, as acceptor, was apparently the debtor, 
yet, in fact, it was an accommodation bill, in which *he had r,,-! ic-, 
joined for the sole behoof of the drawers, who accordingly dis- L J 
counted it, and employed the money for their own purposes. And that 
the pursuers not having allowed the bill to be protested against them- 
selves before retiring it, and their never having claimed the debt during 
the illness of the acceptor, although they must have seen the propriety 
of clearing up the transaction, if it had been a fair one, during his life- 
time, afforded presumptive evidence of the truth of this averment. 

The pursuers admitted, that no value had been given to Barrie, junior, 
at the time he accepted the billj but they affirmed that they had dis- 
counted it for his behoof, and immediately after delivered the money to 
him, and contended, That in all bills, the presumption of law is, that 
the acceptor is the principal debtor : That with regard to accommodation 
bills in particular, unless some general rule were adopted for ascertaining 
who should be ultimately liable for them, such transactions would often 
be inextricable ; and although circumstances perhaps might be imagined 
so strongly in favour of the acceptor as to obviate the legal presumption, 
none such occurred in the present case. 

The Lord Ordinary decerned in terms of the libel ; and the defender 
having reclaimed, the Court "Adhered." 

Observed on the Bench : The law presumes, that the acceptor gets 
value for the bill ; and thisi presumption can only be taken off by writ 



108 ROSS ON OOMMEKOIAIi LAW. 

or oath of party. It does not signify whether value is given when the 
bill is drawn, or only afterwards, when it is discounted. Indeed, in 
accommodation bills, the value is seldom given till the latter period. 
The only difficulty in the present case arises from the false description 
of the value, which is too common a practice, and is resorted to in order 
to make the banker believe the bill had its origin in a real transaction. 
This circumstance, however, will not annul a bill, provided value of any 
sort is either actually received, or in law presumed to have been re- 
ceived. 



r*14.fi1 *^' ^"^ Jaffrey v. Robertson, January 2, lY12,the acceptor of a bill be- 
^ J iug charged by the drawer, suspended the charge, and offered to prove 
by the charger's oath, that the true cause of the accepting of these bills was the 
price of some articles which he had purchased from the charger. This being 
acknowledged by the drawer, the acceptor then offered to prove by witnesses 
present at the bargain, that the quantity and price agreed on would not extend 
to the sum in the bill. The charger answered — This were to subvert the firm 
principle of law that writ cannot be taken away by witnesses, but only scripto 
veljuramento. The bill is accepted without any objection, and can never be 
taken away by such a mixed and divided probation. Esto it were true that the 
bills were granted as the price of merchant ware, yet by accepting a clear liquid 
bill, without any quality or reservation, the acceptor must be held to have 
acquiesced both in quantities and prices, and this can never be elided by offer- 
ing to prove the condition of the bargain by witnesses. The accepting the bill 
is a plain renunciation of such after game to which the acceptor can never re- 
cur, unless he had burdened the bill with such a reservation. On the part of 
the acceptor it was pleaded — The manner of probation proposed does not in- 
fringe on the rule that witnesses cannot take away writ. For here the drawer 
acknowledges upon oath the cause of accepting the bill to have been the price 
of merchant ware. This lays aside the writ, and reduces it to the condition of a 
bargain about moveables, which is capable of beiug proved by witnesses. The 
Lord Ordinary found that Robertson having accepted the bill simply, he had 
renounced any objections to the debt, except what he could prove by the accep- 
tor's oath, and so he could not divide his probation part by oath and part by 
witnesses, but behoved to refer all, both quantities, prices, and conditions of 
the bargain, to his oath; and Robertson having reclaimed, the Court "Ad- 
hered." 

2. In Thomson v. Sharp, February 28, 1849, a charge upon a bill was sus- 
pended, upon the ground that the charger was a non-onerous holder. The 
charger admitted upon oath that he had given no value for the bill, but was 
merely trustee for a prior indorsee. He aegued, however — To establish a plea 
of non-onerosity, it is not enough to prove the last indorsee to be a gratuitous 
holder. AU the indorsees and the drawer himself must be proved to be so, and 
the suspenders should have been prepared to prove by the oaths of all the in- 
dorsees that such is the case. He has not done so, and has therefore failed to 
make out a prima facie case for having his note passed. The Court remitted to 
the Lord Ordinary to pass the note on caution. Lord Justice-Clerk Hope.— As 
caution has been offered, I see no objection to the passing of this note. I 

r*14Tl ^°"^'^ *"°' ^^^^ passed it without caution. Lord Moncreiff. No doubt 

•- -" the suspenders must prove non-onerosity by the oaths of all the indorsees, 
but the question is, Whether in the meantime we are to refuse the note though 
caution be offered? 

3. Although by the law of Scotland want of value can only be proved by the 
writ or oath of the holder, yet it is competent when the defence of no value is 
pleaded, to require the holder to give in a condescendence of the value which 
he alleges to have been given by him, before a reference is made to his oath. 
This was the course followed in the case of Wilson v. Polloc, Gilmour, & Co., 



BILLS OS EXCHANGE. 109 

November 13, 1827. Where also there exist circumstances of a peculiar and 
Buspicious character, a judicial examination of the holder in presence of the 
Court may be ordered. This course was adopted in the case of Campbell v. 
Turner, January 24, 1824. In the case of Campbell v. Hill, November 29, 
1826, the Court refused to adopt this course on the ground that there was not 
sufficient cause of suspicion against the holder. This was an action by a minor 
and his curator, to have a bill which he had granted reduced, on the ground of 
minority, focility, and circumvention. In defence, it was pleaded that the pur- 
suer had been in use to grant bills in the course of the management of his farm, 
and that the defender was a bona fide onerous indorsee. A proof was led, and 
thereafter the Court found that the bill was effectual in the hands of a bona fide 
onerous indorsee, and that the defender's claim to that character had not been 
disproved. The pursuer then prayed the Court to order the defender to appear 
ana undergo a judicial examination, but this the Court refused. Lord Justice- 
Clerk Boyle observed, — There were some very peculiar and suspicious circum- 
stances in the case with Turner, which induced the Court to allow the judicial 
examination. They do not occur here, and I do not think that the present de- 
mand should be listened to. Lord Alloway. — The judicial examination of the 
holder of a bill should not be allowed, except in circumstances of the strongest 
suspicion. I do not go so far as to say that it should never take place, but I 
think it ought to be refused here. Lord Pitmilly. — It is not necessary to con- 
sider the general competency of allowing judicial examinations in cases of this 
kind. Even at the beginning of a case I would not allow it on a vague allega- 
tion of fraud; but in certain cases it may properly be permitted at the com- 
mencement of a cause, as it may prevent the necessity of a proof, or afford aid 
in the investigation; and it is for these purposes that judicial examinations 
have formerly been allowed, as is very distinctly laid down in the' case of 
Goodfellow V. Madder, July 27, 1785. After a proof has been led, and the party 
is brought into the situation that he can only have recourse to the holder's oath, 
it is utterly unjust *to allow a previousjudioial examination, and it ought r^t,.Qi 
to be an invariable rule that in such circumstances a judicial examination ■■ ^ 
should not be allowed. Lord Glenlee, — I always understood that it was con- 
trary to settled law to examine a man judicially on facts only proveable by his 
writ or oath, but if it is to take place at all as to the onerosity of a biU, it can- 
not in the ordinary case be in initio litis. It may turn out in the course of the 
proof that strong suspicions are thrown on the holder, and then I do not see the 
objection to a judicial examination, and that was the state of the case in the 
question with Turner, where it was allowed on account of circumstances coming 
out in the course of the process, as his saying he had no books, and afterwards 
producing them. But there is no vestige in the proof before us here to lead us 
to such suspicion as would justify a judicial examination. 

4. The case of Goodfellow v. Madder, July 27, 1785, referred to by Lord 
PitmiUy in the case just cited, was a suspension of a charge by the acceptor of 
a bill of exchange. The ground of the suspension was, that he had been 
fraudulently induced to adhibit his subscription to the acceptance without full 
value, and he insisted that the charger should be judicially examined, and 
urged that in this manner he would have an opportunity, if the charger should 
advance what was not true to disaprove it, and so to invalidate his claim. The 
Court refused the application, and it was observed on The Bench, — " Where 
circumstances of fraud are relevantly stated against the holder of a bill of ex- 
change, and a proof offered, such a previous examination as is here required 
might be highly expedient, both for superseding the necessity of farther evi- 
dence, and for the better investigation of truth. But to allow that method of 
proceeding, in consequence of general allegations like the present, would tend 
in a great measure to obstruct that free currency of bills of exchange, which is 
so essential to trade." It may however be doubted whether a judicial examina- 
tion should ever be allowed, except where circumstances of a very suspicious 
nature have been proved against the holder, the general principle of law being 
as laid down by Lord Glenlee in the case of Campbell v. HiU, that a man 
ought not to be examined judicially on facts which are proveable only by his 
writ or oath. 
Apeil, 1854.— 8 



110 BOSS ON OOMMEKCIAL IiAW. 

5. Cases have occurred in wHct tie circumstances have been held to exclude 
the rule that non-onerosity can only be proved by the writ or oath of the holder. 
In the case of Campbell v. Dryden, November 25, 1824, the pursuer, as indorsee 
of a bill, brought an action of payment against the defender as acceptor. The 
defender had accepted for the accommodation of a party for whom the pursuer 
was agent, and the pursuer as indorsee having discounted the bill, retired it 
when it became due. In defence to the action the defender pleaded, that the 
r*1 4.q1 P^i'Siier *was not an onerous holder, and that he had retired the bill not 
L ■'■^^J for his own behoof as indorsee, but merely as agent for the party for 

'whose accommodation the bill had been granted. The Court remitted to an 
Accountant to report as to the state of transactions between the pursuer and 
his constituent, for the purpose of discovering whether the pursuer had retired 
the bill as agent for and therefore for behoof of the drawer. The Accountant 
reported, that taking all the circumstances into consideration, he was of opin- 
ion that the pursuer must be held to have retired the bill as agent for behoof of 
his constituents. The Court, by a majority, adopted the view of the Account- 
ant, and assoilzied the defender. Lords Craigie and Pitmilly were of opinion, 
that the circumstances established by the report did not afford any evidence 
that the pursuer had retired the bill as agent of the drawer, and not for his own 
behoof, and that at any rate he could not be deprived of the privileges of the 
holder of a bill except by his writ or oath. Lord Justice-Clerk Boyle and Lords 
Grlenlee and Robertson, on the other hand, held the evidence of the pursuer 
having acted merely as agent to be sufficient, and considered that the special 
nature of the ckse took it out of the general rule of law that non-onerosity can 
only be proved by writ or oath, which rule they thought would not be affected 
by the decision. 

6. The case of Campbell v. Dryden was founded on the case of Campbell v. 
Smith, June 12, 1827, but the circumstances of that case being different from 
those of the former, and the defender having failed to establish his defence by 
the writ or oath of the pursuer, the Court descerned against him. In reference 
to the case of Campbell v. Dryden, it was observed that the judgment of the 
Court in that case amounted to this, that if a party's account show that the 
money paid by an agent to retire a bill in which his constituents were obligants, 
was truly advanced out of his constituent's money, and that he acted merely as 
an agent or hand to transfer the money, the circumstance of his name being on 
the back of it as indorsee would not entitle him to insist in the defence, that he 
could only be put on the writ of his oath. 

1. The case of Harter v. George's Trustee, May 24, 1832, was an action on 
a bill by the indorsee against the trustees of the acceptor. The trustees pleaded 
that the bill had been accepted by their constituent for the accomodation of the 
drawer, — that the pursuer was the brother of the drawer, and that he had got 
the bill from the drawer after the execution of the trust-deed in favour of 
his creditors. These facts having been admitted by the pursuer, the Court found 
that he was not entitled to the privileges of a bona fide onerous indorsee, and 
assoilzied the defenders. The pursuer having appealed to the House of Lords, 
r*^gQ-| the judgment of *the Court was affirmed May 13, 1834. Lord Wynford 
L J observed, — " It has been insisted that it is to be presumed in all cases 
that an indorsee holds the character and is entitled to the privileges of a 
bona fide onerous indorsee, until that presumption is removed by the confession 
of the party or by writings. But an indorsee who has obtained a bill by 
fraud from the indorser, or to whom it has been indorsed by collusion with the 
indorser for the purpose of cheating creditors, would not be likely to confess 
that he was not a bona fide holder, or to furnish any written evidence that 
would destroy his right to sue on the bill indorsed to him. The modern cases 
show that evidence raising a suspicion of fraud, prevents the application of the 
rule, and lets in circumstantial evidence to prove the want of bona fide conside- 
ration for the indorsement. There is in this case, from the admission of the 
pursuer himself, most urgent evidence of fraud. There are several cases, the 
judgments in which break m on the old rule said to prevail in ancient times in 
Scotland ; a rule which could only have been endured when bills of exchange 
were never drawn or indorsed except in the course of trade, and as the means 



BILLS Oi" EXCHANGE. Ill 

of paying commercial debts that were justly due. It is a rule not suitable to 
the present times, when so many bills are manufactured and circulated for the 
purpose of enabling insolvent persons to get deeper in debt. There are several 
cases in the books in which the Court of Sessions have not required a reference 
to be made to the oaths of the holders of bills as to the true bona fides of the 
indorsmeuts of such bills. In the case of Campbell v. Dryden, your lord- 
ships have a precedent which authorizes you to say that you are not prevented 
from looking into all the circumstances of this transaction. Your lordships 
will, I think, confer a great benefit on Scotland by giving your sanction to thii 
precedent to which I have referrred yon, and to flie judgment of the CourJ 
below." 

8. It may be doubted whether some of the remarks of Lord Wynford are 
altogether in accordance with the principle that prevails in the law of Scotland 
in regarding to the mode of disproving the onerosity of the holder of a bill of 
exchange. These observations were founded upon strongly in the case of 
Miller v. Keppen, Dec. 9. 1848. Lord Moncreiff, however, observed, — " I 
would not be inclined to rest much on the terms of Lord Wynford's judgment in 
the case of Hunter v. George's Trustees. The rules of the law of Scotland on 
the subject seem to have been new to his lordship, and to have amazed him, 
but he decided by affirming the judgment of the Court below, and that judgment 
followed the case of Campbell v. Dryden." 

9. The law of Scotland appears to differ from the law of England in regard 
to bills obtained by force. In England the holder of a bill so obtained must 
instruct that he *gave value for it, and failing to do so he will be non-r^f,---, 
suited. This was the law laid down, and the course adopted in the case ^ J 
of Duncan v. Scott, 1 Campbell 100, see supra, p. 143. By the law of Scotland, 
a bill obtained by force is not effectual against the grauter, even when in the 
hands of an onerous indorsee. It is held to be the same as a bill forged, and so 
not the bill of the granter. The loss, therefore, must fall on the onerous indor- 
see. This rule was followed in the case of Willocks v. Callendar, November 
26, 1787, where it was laid down that a bill, of which the acceptance was pro- 
cured by concussion, was ineffectual in the hands even of an onerous indorsee. 
The same rule was adopted in the case of Wightmau v. Graham, December 6, 
1787. The indorsee there pleaded — That no exception was competent against 
an onerous indorsee of a bill of exchange which did not appear from the writing 
itself. The granter of the bill on the other hand pleaded — The privilege of 
current bills is not disputed. But in every action founded on a written docu- 
ment, it is necessary that the obligation, of which it is the voucher, shall not be 
destitute of those qualities that are essential to every agreement. If it has been 
impetrated by force or fear, the shape in which it has been framed cannot be of 
any importance. The Court sustained the defences, being of opinion that a 
writing, impetrated as the one in question had been, was of no validity. 



A PAETT SIGNING HIS NAME ON A BLANK PIECE OP PAPER BEARING A 
BILL STAMP, EITHER AS DRAWER, ACCEPTOR, OR INDOKSER, WILL BE 
LIABLE IN THE CHARACTER IN WHICH HE SIGNS FOR ANY SUM AF- 
TERWARDS FILLED IN WHICH IS COVERED BY THE STAMP. 

I — RUSSBL V. LANGSTAFFB. 

Nov. 22, 1780.— E. 2 Doug. 514. 

One Galley having had frequent money transactions with the plaintiff, 
who was a banker, and having overdrawn his cash account, the plaintiff, 
suspecting his credit, refused to advance him any more money, without 
the addition of the name of some indorser of whom he should approve. 
Upon this, Galley applied to the defendant, and he indorsed his name on 



112 KOSS ON COMMERCIAL IiAW. 

five copperplate checks, made in the form of promissory notes, but iii 
blank : i. e., without any sum, date, or time of payment bemg 
[*1^2] mentioned *in the body of the noteS. Galley afterwards filled 
up the blanks with different sums and dates, as he chose, and the 
plaintiff discounted the notes. One of them was made payable on the 
22d of September, two on the 27th of September, and two on the 4th_of 
October. These notes not being paid when they became due, the plain- 
tiff, on the 14th of October, called upon the defendant, as indorser, for 
the payment of all of them, and upon his refusal brought this action, 
which was tried before Hotham, Baron, at the last assizes for the county 
of Durham. It appeared that Galley had become a bankrupt on the 20th 
of September, and that, on the 27th, the defendant had been present at 
a meeting of his creditors. It also appeared that Russel knew the notes 
were blank at the time of the indorsement. The plaintiff and the defen- 
dant lived in the same town. 

For the defendant, at the trial, it was objected, 1, That these notes 
being blank at the time of the indorsement, they were not then promis- 
sory notes, and that no subsequent act of Galley could alter the original 
nature or operation of the defendant's signature, whicb, when it was writ- 
ten. Was a mere nullity. It was also objected, 2, That the notice of the 
non-payment by the drawer was not given soon enough to the indorser. 

The Judge being of opinion with the defendant, on the first point, he 
directed the jury accordingly, and they found a verdict for him. 

On Wednesday the 8th of November, Ardm obtained a rule to show 
cause why there should not be a new trial, which was argued this day by 
the Attorney- General, Lee, and Scott, in support of the verdict, and 
Dunniug for the plaintiff. 

The Attorney- General gave up the first point, but Lee said he thought 
it of consequence enough to be argued. It never had been determined, 
he said, and deserved consideration. The copperplate checks in this case, 
without sum, or date, were mere waste paper, and Langstaffe's name upon 
them had no more effect than if written on any other blank piece of paper. 
r*T fi'-tn ^^ indorsement supposes a bill, or promissory note, then actually 
L J existing ; and if a party take an indorsed bill, or note, *know. 
ing, at the time, that it was not the subject of an indorsement when the 
name was written on the back of it, he is not injured if he is afterwards 
told that he shall not be permitted to treat it as a bill or note. The 
very declaration, in this action, necessarily states a pre-existing note, 
previous to the indorsement ; and such forms are not to be considered as 
useless, and without a meaning. How can the plaintiff be permitted to 
say, that, by this signature, the defendant contracted for a given sum, 
when he knows, that, at the time of the signature, he did not contract for 
anything ? This defence might not be competent, as against a third per- 
son, but it seems just and fair, as against the plaintiff, who was aware of 
the original nature of the transaction. On the other point, he admitted, 
that what shall be deemed reasonable notice to an indorser, of non-pay- 
ment by the drawer, ought properly to be decided by the jury , but said 
it was well established, that such notice ought to be as early as possible. 
That, where the parties live at a distance, the notice ought to be given 



BILLS OF EX HAN GB. 113 

by the first post, though, if anything delay the going out of the post at 
the usual time, that will be an excuse ; but that, here, thfe parties lived 
in the same town, and no notice had been given till ten days after the 
time of payment, even in the case of the notes payable in October. As 
to the bankruptcy, it had been frequently ruled by Lord Mansfield, at 
Guildhall, that it is not an excuse for not making a demand on a note or 
bill, or for not giving notice of non-payment, that the drawer, or acceptor, 
has become a bankrupt ; as many means may rem3,in of obtaining pay- 
ment, by the assistance of friends, or otherwise. 

On the other side, it was stated, by Dunning, that' the jury, whose 
province it was to decide on the second point, were, upon that point, 
clearly with the plaintiff, and that they had found a verdict for the de- 
fendant, in deference to the Judge's opinion, on the other question. As 
to that question, he insisted that there could be no doubt but the direc- 
tion was wrong. It strengthened the plaintiff's case, that he knew the 
notes were blank when indorsed. For what purpose could he suppose 
the indorsements were made by the defendant, but to authorise Galley to 
fill them up with any sum he pleased, and to bind *himself, as p^-, ^ .-, 
his security, to that extent. The declaration states the notes to I- -< 
have been made before the indorsements ; so all declarations against in- 
dorsers must ; but the defendant, by indorsing them, concluded himself 
from contending, or proving, that they were not filled up when he signed 
them. 

Lord Mansfield. — There is nothing so clear as the first point. The 
indorsement on a blank note is a letter of credit for an indefinite sum. 
The defendant said, " Trust Galley to any amount, and I will be his 
security.'' It does not lie in his mouth to say, the indorsements were 
not regular. The direction having been wrong on this point, it is need- 
less to go into the other. 

The rule made absolute. 



IL— SNAITH V. MINGAY. 
Jan. 29, 1813.— B. 1 M. & S. 87. B. C. L. R. vol. 28. 

This was an action brought under an order of the Court of Chancery 
against the defendants as indorsers of four bills of exchange, in which 
the jury found a verdict for the plaintiff, subject to the opinion of the 
Court on the following case. 

Prior to and during the time when the bills were drawn and negoti- 
ated in the manner hereinafter mentioned, H. A. Bayley, Charles Cot- 
terell, and Cornelius Low Wallace, carried on, as partners, at Waterford 
in Ireland, (where Bayley and Cotterell resided,) the trade of provision 
merchants under the firm of H. A. Bayley and & Co. Wallace likewise 
carried on upon his own separate account, and in his own name, in Wood 
Street in London, where he resided, the trade of a dealer in bacon, and 
also transacted the business of the firm of H. A. Bayley, and Co. j but 
it was covenanted by the articles of partnership between the partners that 



114 KOSS ON COMMERCIAL LAW. 

Wallace should neither draw, accept, nor indorse bills in the name of 
the partnership firm. A short time previously to the respective dates of 
pju-.„ the bills, Bayley and *Cotterell, or one of them, at Waterford, 
L -J signed and indorsed in the name of the firm, copperplate impres- 
sions of four bills of exchange, leaving blanks for the date, sums, times 
when payable, and names of the drawees, and transmitted them in 
that state to Wallace in London, to be used by him for his individual 
aocommodj|,tion in his separate trade of a bacon merchant, and not upon 
the partnership account. The blanks were afterwards filled up by Wal- 
lace in London, who there negotiated the bills j the first of which was 
dated Waterford, 3d April, 1810, and was drawn by H. A. Bayley and 
Co. upon Boss and son in London, payable in 90 days after date to 
the drawer's order. The other three bills were not materially different, 
varying only as to the days of their date, the sums, and times of pay- 
ment, and the names of the persons upon whom they were drawn. The 
stamps upon these bills were appropriate Irish stamps for the respective' 
sums inserted therein, and were upon the copperplates when-transmitted 
from Ireland, but were not legal stamps for bills of exchange drawn in 
England of the same respective value. After the blanks were filled up 
the bills were duly accepted by the several persons to whom' they were 
addressed, and were afterwards indorsed by the defendants, at the re- 
quest, audi for the benefit of one Edmund Cotterell, by whom they were duly 
indorsed and negotiated to the plaintiffs, who discounted the same in 
their business as bankers for a valuable consideration, without any know- 
ledge of the circumstances under which the bills were drawn or filled up, 
or any other circumstances connected with their antecedent negotiation. 
The bills were respectively presented to and dishonoured by the acceptors 
when they became payable, and due notice thereof was given to defend- 
ants, who refused payment, on the ground that the bills were void for 
want of having proper English bill stamps affixed to them. 

If the Court should be of opinion that the plaintiffs are entitled to 
recover, then the verdict to stand ; otherwise to be set aside, and a non- 
suit entered. 

Nolan for the Plaintiffs. — Contended that the bills were not void for 
want of an English stamp. The question depends on Stat. 48 Geo. Ill,, 

r*1561 "■ ■'"^^' ^^*'' ^' "^^^^^ ^^^ ^^^ Stamp Act *in force at the time 
L J when these bills were drawn ; and that question is. Whether these 
bills can be considered as inland bills within the meaning of that statute? 
Now, in order to constitute an inland bill, the bill must not only be pay- 
able, but must also be drawn in England ; whereas here the bills were 
drawn in Ireland at the time when they were signed by Bayley and Cot- 
terell. The mere signature of a party to a bill amounts to an obligation 
upon him to pay the bill, although it is in blank at the time of his sig- 
nature. Accordingly, in the case of Kussel v. Langstaffe, where it was 
objected that the indorsement having been made on a blank bill, it was 
to be considered as no bill, and it was so ruled at nisi prius, and the 
plaintiff was nonsuited upon the objection; the Attorney-General,, who • 
was afterwards to have supported the nonsuit, though the point too clear 
for argument, and was obliged to abandon itj and Lord Mansfield, C. J., ' 



BILLS OP EXCHANGE. 115 

observed, that the indorsement on a blank note was in the nature of a 
letter of credit for an indefinite sum. So here, the signature in Ireland 
on the blank bill was equivalent to drawing a letter of credit in Ireland. 
In Bayley on Bills it is laid down, on the authority of Collis v. Emmett, 
that if a person sign his name upon a blank paper stamped with a bill 
stamp, and deliver it to another person to draw such bill as he may 
choose thereon, he is the drawer of any bill to which the stamp is appli- 
cable which such person shall draw thereon ; and accordingly in Collis 
V. Emmett, where the defendant had so signed his name, and delivered 
it to Livesey and Co., who drew for a large sum, and transferred it to 
the plaintiff, the Court gave judgment for the plaintiff on a count alleging 
that the defendant drew the bill : the signature, therefore, is the princi- 
pal act, and the subsequent acts are only incident and referable to it. 
Here the filling up the blanks by "Wallace in London had reference to 
the authority given to him by Bayley and Cotterell in Ireland, and, when 
completed, had effect from the time of their signature; and this autho- 
rity was not indefinite, but was necessarily limited by the amount of the 
stamp at the time of the signature, the stamp laws not allowing of any 
restamping of a bill of exchange. If then the bills are to be considered 
as virtually drawn in Ireland, it is clear that they ought to bear the 
stamp required by the law *of that country, in order to make |-,, ,„-. 
Bayley and Cotterell, the drawers, liable; for without such a L J 
stamp, according to the cases of Alvez v. Hodgson, and Clegg v. Levy, 
they could not have been sued upon the bills. The plaintiffs, however, 
are not driven to the necessity of maintaining that these bills were drawn 
in Ireland, although, on the authority of Collis v. Emmett, that position 
might be maintained : it is sufficient for them that the bills were not 
drawn in England. 

Scarlett, contra. — It may be admitted that as far as the signature of 
the drawer is essential to constitute a bill of exchange, the bills in ques- 
tion were perfect; but there are other requisites equally essential with 
that of the signature of the drawer, such as the date, sum, and the name 
of the drawee, the want of any one of which will render the bill incom- 
plete and of no effect. It becomes a bill of exchange only from the time 
when all these requisites are perfected, and must therefore have a stamp 
applicable to that time and the place where it so becomes a bill. Here 
the signature alone was made in Ireland ; the other requisites were com- 
pleted in England ; the bills therefore are to be considered as English 
bills, requiring an English stamp ; for the law requires a stamp on a bill 
of exchange, not on a blank paper. The signature of Bayley and Cot- 
terell was in the nature of a power of attorney to Wallace to draw 
bills in their names, which he executed in England, and the bills were 
first issued there for his accommodation; so that the transaction was 
altogether limited to England. It was in effect the same as if Bayley 
-and Cotterell, instead of transmitting their signature, had sent an order 
to Wallace to subscribe their names to the bills in London ; in which 
ease, if he had so done, the bills would unquestionably have been inland 
bills within the meaning of the statute. But the circumstance of their 
being dated at Waterford will not alter their nature, if in effect they first 



116 ROSS ON OOMMEROIAL LAW. 

assume the character of bills of exchange in England, The ease of Eus- 
sel V. Langstaffe only decides that when a bill of exchange has received 
its formal completion, so as to take effect as a bill, it will bind a person 
who has previously indorsed it when in an imperfect state. The 
L ^'^°J question here is not whether Bayley and Cotterell may *not be 
responsible upon their signature, but at what time these bills became 
bills of exchange. 

Lord Ellenborough, C. J ^It is probable that sitting at nisi prius 

I hesitated whether this instrument could in strictness be considered as a 
bill of exchange, until the name of the drawee was supplied. The ques- 
tion now is, when that name was supplied, whether it did not become by 
relation a bill of exchange from the time when the signature of the 
drawers, which was the obligatory act upon them, was first put to it. 
What is this case ? A merchant resident in Ireland sends to Englatid 
certain bills of exchange drawn on proper Irish stamps, and in that 
respect he limits the authority of the person for whose benefit the bills 
are transmitted. These bills are signed with the name of the merchant 
in Ireland, indorsed with his name, and dated from a place in Ireland, 
and are transmitted to the correspondent in England) with authority to 
him to fill up the remaining parts of the instrument. The moment the 
blanks are filled up, does not the instrument by relation become the bill 
of the party in Ireland, as much as if it had been drawn in all its parti- 
culars with his own hand ? It was so held in Kussel v. Langstaffe. In 
that case, at the time of the indorsement it was not a bill of exehangej 
but the moment the other parts were filled up by an authorized agenl^ 
then it became the bill of the party, and was considered as fit to be de- 
clared on as such. I remember the case at Durham, and afterwards in 
this Court. It was asked upon that occasion how the allegation in the 
declaration " that the defendant afterwards indorsed the said bill," could 
be sustained? But the Court resolved that they would so adjust the 
acts of the party as to give effect to the intention, and for that purpose 
held, that an indorsement, which was prior in point of time to the draw- 
ing, was to be considered in law as posterior. Here the relation back is 
made to a time when a valid and obligatory authority, viz., the signature 
of the drawer, was impressed on the bill, which in Collis v. Einmett was 
considered as a sufficient drawings and it is quite immaterial, whether 
the filling up the blanks, which afterwards made it a perfect bill of ex- 
change, was done by a mere agent, or by an agent who had an authority 
r*1591 """P^^'^ ^^*'^ ** discretion. Kis not stated that there was any 
L J fraud on the stamp laws of either country. The instrument, 
therefore, must be considered as a bill of exchange drawn in Ireland, and 
not as drawn in England. 

Grose, J.— The question is. Whether this is to be considered as an 
Irish or English bill of exchange? The case seems to me to be this : a 
piece of paper signed by a person in Ireland is given for the purpose of 
being filled Up and operating as a bill of exchange; and although it was 
imperfect at the time when it was signed, yet when it became perfect by 
being filled up, it operated as a bill of exchange from the time when it 



BILLS OP E^OHANGB. 117 

was signed and intended to have such operation. I consider it therefore 
as an Irish bill of exchange. 

Le Blano, J. — This is an action against the indorsers of a bill of ex- 
change; to which it has been objected, that the bill is void for want of 
a proper stamp. That brings it to the question, Whether this is an Eng- 
lish bill 7 The party drawing the bill was a person bona fide resident in 
Ireland, and no fraud is stated in the case. It does not appear that he 
drew the bill in Ireland with any fraudulent intent of evading the stamp 
laws, or that he went to Ireland for that purpose ; but the case states, 
that being resident there he drew the bill, i. e., subscribed his name in 
the character of drawer, and afterwards as first indorser, on a paper pro- 
perly stamped according to the revenue laws of Ireland, and having every 
mark to designate it as a bill of exchange. It is not a question whether 
it was then perfected as a bill of exchange. It certainly was designated 
as such. The party in Ireland then sends it over to this country with 
aathority to his correspondent here to insert the day of the date, the sum, 
and the name of the drawee. It comes here, therefore, as an incipient 
bill of exchange, and so far having the essence of a bill, as it has the 
name of the drawer and first indorser upon it; and afterwards the party 
to whom it is sent, and who has authority given him by the signatnrej 
addresses it to a third person as the drawee, and supplies the sum and 
date. "Whether this was a perfect bill in Ireland is not so much the ques- 
tion as whether it was a bill *drawn in England. I call it an j.^^ j,^., 
incipient bill, which by the subsequent acts was made a perfect L -I 
one : for the cases show that when a signature is once written to a paper 
virhich is intended to have the operation of a bill of exchange, it becomes 
such when perfected from the time when it is signed, so as to support an 
allegation that the party either drew or indorsed the bill. Here the 
transaction is the same as if the party in Ireland had desired his corres- 
pondent in London to fill up a bill of exchange, and send it over to him, 
in order that he might sign it : it diilers only in this, that instead of hav- 
ing a bill sent to him already filled up, and then signing his name to it, 
he signs his name first and then sends the bill to his correspondent. 

Batley, J. — The only act to pledge the credit of the house of Bayley 
and Co. was the signature in Ireland. Suppose the person subscribing 
his name as drawer had died whilst the bill was on its passage, and after- 
wards the blanks had been filled up and the bill negotiated to an innocent 
indorsee ; I should think that in that case the representatives of the party 
signing the bill would have been liable. This shows that when the 
whole is filled up it has reference to the time of the signature, which in 
this case was made in Ireland. 

Judgment for the Plaintiffs. 



III.— FAIR V. CRANSTON. 

July 11, 1801.— S. M. 167T. 

There was found in the repositories of James Fair, agent for the 
British Linen Company at Jedburgh, deceased, a bill at three days' date, 



118 ROSS ON OOMMEEOIAL LAW. 

for £40, blank in the drawer's name, subscribed by three acceptors, of 
whom Robert Cranston was one. On the back was marked a receipt for £15. 

William Fair having been confirmed executor to the deceased, James 
Fair, his father, inserted his own name as drawer, and brought an action 
r*lfin ^8*'°^* Cranston, in which he obtained *decree in absence. 
L J Cranston haying brought a suspension. Lord Cullen found the 
letters orderly proceeded. 

On advising a representation, with answers, his lordship pronounced 
this interlocutor : — "In respect it is clearly proved, by the excerpts from 
the books of the late Mr. James Fair, that the bill in question, dated the 
11th day of June, 1793, payable three days after date, was granted for 
the sum of £40 sterling, then advanced by him to the suspender, and 
the other acceptors of that bill, and that a partial payment of £15 ster- 
ling was made upon the 17th of September thereafter, and which partial 
payment is marked on the back of said bill; and further, that although 
the said James Fair omitted to subscribe his name as drawer, and that it 
remained in that situation till his death, in the year 1796 ; yet, as the 
present charger, his son, has expede a confirmation as executor to him, and 
has thereby vested in himself a right to the said bill, and adhibited his 
name as drawer, before producing the same in judgment : Therefore adheres 
to the interlocutor complained of, and refuses the desire of the repre- 
sentation ; but supersedes extract till the third sederunt day in May next." 

The cause was brought before the Court by petition j in which it was 
pleaded, that the bill must be considered as blank in the creditor's name, 
and therefore void and null; Erskine, b. 3, tit. 2, §28; Macraith v. 
Murdoch, No. 37, p. 1436; Walkingham v. Campbell, No. 23,,p. 1684; 
Douglas and Wood v. Logan, No. 41, p. 1438 ; Cathoart v. Representatives 
of Dick, No. 42, p. 1439 ; Robertson and Ross v. Bisset,No. 18, p. 1677; 
Act 1696, cap. 25. 

It was further pleaded. That the writing founded on being defective as 
a bill, could not be sustained on any other footing, as a voucher of debt. 
It was not a bill, because not a mandate. It was no promissory note, 
because it contained no promise to pay. It was not a deed, because it 
had not the statutory solemnities ; and it was not holograph of Cranston. 
The confirmation conveyed the document, such as it was; but it could not 
make it better; Erskine, b. 3, tit. 2, § 28. 

The Court refused the petition without answers. 
P1621 *'^ second petition was likewise refused without answers. 
L J The Court were nearly unanimous. It was observed on The 
Bench, That from the books of the deceased, and the partial payment, it 
was evident who was meant to be drawer, which was sufiScient in an 
action for paynient of the debt, which this was, not a charge' upon the 
bill. It was likewise said, that a blank acceptance, found in the reposi- 
tories of a defunct, may be filled up by his representatives, and diligence 
may proceed in his name. 

On the Session Papers, Lord President Campbell has written,— 
"Drawer's name is on the bill. It is of no consequence to acceptor who 
signs it as drawer. We are to presume that it was the son, and not the 
father, that gave the value. Does the circumstance of the drawer neg- 



BILLS or EXCHANGE. 119 

lecting to sign his draft operate as a discharge to the acceptor ? May he 
not authorize any person to sign the drawing it for him, and if so, may 
he not leave it as a legacy to his son, and will not this be a sufficient au- 
thority to the sou ? Suppose he becomes bankrupt, and the debt is vest- 
ed in trustees for creditors." 



IV. — OGILVIE V. MOSS. 

June 28, 1804.— S. M. App. Bill 17. 

Among the papers of William Marshall, late assistant cashier to the 
Dundee Banking Company, there was found a bill in these terms : — 
"£425. Dundee, 2'ith January, 1802. Three months after date, pay 
to me or my order, four hundred and twenty-five pounds sterling, at the 
town-clerk's office here, being for value delivered you. 

W. H. Moss. 
^ £425 

" To W. H. Moss, Esq., 10 ' 

presently residing at > 20 

Theatre, Greenock. 15 



"Due £470." 

The name of the drawer was not affixed to the bill, but it was blank 
indorsed by Marshall, who, by means of the situation *he ocou- i-ni/^o-i 
pied in the Bank, had been in the use of accommodating persons L -• 
with money upon bills, promissory notes, and other securities. 

Before this bill became due, the affairs of Marshall went into disorder, 
and he left Scotland. His estate was sequestrated, and John Ogilvie, 
writer in Dundee, was appointed trustee of the bankrupt subject. In 
that character, he brought an action before the magistrates of Dundee 
against Moss for payment of the bill, and also of some additional ad- 
vances, which it appeared from the jotting on the bill had been made to 
him by the bankrupt. 

The Magistrates decerned for payment. Upon this Moss presented a 
bill of advocation. 

Pleaded for the Advocator, — By the Act 1696, c. 25, all written 
documents and obligations are null which are drawn bl&nk in the name 
of the creditor. The bill founded upon in the present case, cannot there- 
fore afford a ground of action, as there is neither the drawer's subscrip- 
tion annexed, nor the creditor's name mentioned in the body of the writ- 
ing, and which consequently is " blank in the name of the person in 
whose favour it is granted." Although the Act of Parliament makes an 
exception of the indorsation of bills, there is no exception with respect 
to the bill itself, which assuredly falls under the statute j Erskine, b. iii. 
t. 2, § 28; Creditors of Craig v. Brand, February 13, 1711, Fountain- 
hall; "Walkinshaw v. Campbell, January 8, 1730; Henderson v. David- 
son, July 27, 1738, Kilkerran, p. 69. This radical defect is not reme- 
died by indorsation, because if the bill itself be null and void, the indors- 



120 .ROSS ON COMMEKOIAL LAW. 

ation can convey nothing; Tinw. February 15, 1749, Grant; Erskine, 
b. iii. t. 2, § 28. Neither can the indorsation afford proof of the person 
to whom value was paid ; for indorsations are often used merely for the 
purpose of giving currency to bills of exchange. 

Bills are sustained as probative writs entirely from favour to com- 
merce, and in obedience to mercantile law ; otherwise they are void, by 
the Act 1681, as wanting the names of the writer and witnesses. But to 
entitle a bill to its extraordinary privileges, it must be a proper mercan- 
tile document, executed in the form usually practised among merchants, 
r*1641 *°*^ ^°^ ^^^ purposes *for which bills of exchange are generally 
>■ -I employed. This pretended bill, however, is not executed accord- 
ing to- the custom of merchants, being defective in an essential requisite, 
and is evidently not a mercantile document ; so that by the Act 1681, it 
is null and void. , 

Answered for the Respondent. — The Act 1696, e. 25, applies not to 
bills of exchange, but only to bonds^ assignatic^ns, and sueh deeds as re- 
quire attestation by witnesses. The indorsation of bills, accordingly, is 
introduced, not as an exception, but as a declaratory explanation. It is 
very true, in our early practice, when the nature of bills was not so 
thoroughly understood, a different construction was given to the Statute. 
But for these many years the decisions, agreeably to the great facilities 
afforded to mercantile transactions, have confined the enactments of the 
Statute to writings executed aceording to the direction of the Act 1681 ; 
Cathcart v. Henderson, November 25, 1748, Falc. ; Diet, voce Bill of 
Exchange ; Douglas and Hood v. Logan, 1748 j Crichton and Dow v. 
Syme, 21st July, 1772; C»rlyle, 26th May, 1790; Brown v. Campbell, 
November 28, 1794; Fair v. Cranston, July 11, 1801. 

With respect to the argument founded on the Act 1681, it will be 
remembered, that at an early period much jealousy was entertained by 
the Judges, both in England and Scotland, with regard to the extraordi- 
nary privileges of bills of exchange, and various difficulties occurred, 
which were all in process of time removed; Holt's Eeports, p. 113 ; 1 
Salkeld, 130, Trin. ; Tn'dhope t. TurnbuU, June 22, 1744, Kames ; 
Diet, voce Promissory Note. The bill in the present case, although left 
blank in the name of the drawer, is possessed of all the essential requi- 
sites to constitute a debt. The acceptance imports the receipt of the 
money for which it was granted, aad also an obligation to pay it. 
■Whereve;r, therefore, a person accepts g, bill which is blank in the name 
of the drawer, he becomes bound to pay the person who can show he has 
a right to the debt. It is of no consequence whether it has the drawer's 
name upon it, provided it can be clearly shown in whom the jus 
exigendi exists; February 8, 1785, Drummond v. Creditors of Druuir 
mondj Hare v. Geddeg, November 22, 1786, Appendix to vol. vii. Fao. 
Coll. 

r*1651 *'^^^ ^'^^ °^ advocation was passed ; and the Lord Ordinary 
■- J assoilzied the defender. 

But the Court, upon advising a petition, with answers, "Altered the 
interlocutor of his Lordghip, and repelled the defence founded on the 
plea, that the bill is not probative." 



BILLti OF EXCHANGE. 121 

1. The case CrutcUey v. Clarence, 2 M. & S. 90, was an action against the 
drawer of a bill of exchange for £200, in which the name of the payee was 
left blank. The plaintiff, to whom it had been indorsed, inserted his own name 
as the payee. A verdict was found for the plaintiff. It was thereafter moved 
to enter a nonsuit, or for a new trial, on the ground that the plaintiff had no 
right to insert his name in the bill, and that the present case was distinguish- 
able from that of Russel v. Langstaffe, because there the bill was filled up by 
one of the original parties. The Court refused the rule. Lord Ellenborough, 
C. J. — As the defendant has chosen to send the biU into the world in this form, 
the world ought not to be deceived by his acts. The defendant by leaving the 
blank undertook to be answerable for it when filled up in the shape of a bill. 
Le Blanc, J. — It is the same thing as if the defendant had made the bill pay- 
able to bearer. Bayley, J. — The issuing the bill in blank without the name of 
the payee, was an authority to a bona fide holder to insert the name. 

2. In the case of Usher v. Dauncey, 4 Campbell, 97, a member of a partner- 
ship consisting of several individuals, drew a bill of exchange in blank in the 
partnership firm, payable to their order, and having indorsed it likewise in the 
partnership firm, delivered it to a clerk, to be filled up for the use of the part- 
nership as the exigencies of business might require. The partner who drew 
the bill having died, and the surviving partners having assumed a new firm, 
the clerk fillea up the bill, inserted a date prior to his death, and sent it into 
circulation. The Court held that the surviving partners were liable as drawers 
of the bill to a bona fide indorsee for value, although no part of the value came 
to their hands. Lord Ellenborough observed, — The case came within the case 
of Russel V. Langstaffe. The power must be considered to emanate from the 
partnership, not from the individual partner, and, therefore, after his death, 
the bill might still be fillfed up to bind tne survivors. 

3. In Scotland, in the case of Smith v. Taylor, February 2V, 1824, the ac- 
ceptor of a bill suspended a *charge, on the ground that the charger had r,^, „„-, 
filled up and signed as drawer the bill when blank, and contended that'- -' 
the suspender being in the knowledge that the bill was granted for the accom- 
modation of a third party, must be held to have come into the place of that 
party, and, rtinsequently, was not entitled to the privileges of an onerous hold- 
er who had acquired the bill when it was filled up. It appeared that the ac- 
ceptor had been in the use of accommodating one Nisbet with blank bills signed 
by hira, and one of these that party had delivered to the charger for an onerous 
consideration. The bill was filled up in Nisbet's presence for £86, — the 
charger signing as drawer, and Nisbet as co-acceptor with the defender. Tay- 
lor then indorsed the bill so filled up to the Bank, in payment of JNisbet's 
acceptance of £50, and delivered the balance to Nisbet. Nisbet having become 
bankrupt, Taylor retired the bill, and charged the defender for payment. In 
support of the charge, he contended that though he was in form the drawer of 
the bill, he had truly advanced value for it, and was therefore the creditor in the 
bill, and entitled to the privileges of an onerous holder. The Court were of 
opinion, that if a holder had truly given value for a skeleton bill, it was of no 
consequence whether he appearea in it in the character of drawer or indorsee. 
Lord Glenlee observed, — Skeleton bills are no doubt dangerous, but they must 
now be supported according to the general rule which has been laid down in 
the authorities founded upon. Lord Robertson. — I am of the same opinion. 
The intention of Smith in putting his name to such a document, was to become 
security for as large a sum as the stamp would bear, and he must be responsi- 
ble accordingly, whether the third party appears as drawer or indorsee. 



PAROL EVIDENCE OP AN ALLEGED AGREEMENT COTEMPORANEOUS WITH 
THE DRAWING OE A BILL OR NOTE IS INADMISSIBLE TO CONTRADICT 
OR VARY THE INSTRUMENT; BUT IN ENGLAND, A SUBSEQUENT AGREE- 
MENT VARYING THE INSTRUMENT MAY BE PROVED BY PAROL; PRO- 



122 KOSS ON COMMEEOXAIi LAW. 

VIDED A VALUABLE CONSIDERATION FOR SUCH AGREEMENT IS ALSO 
PROVED. 

I. — FREE V. HAWKINS. 

Not. 21, 1817.— E. 8 Taunt. 92. B. 0. L. R. vol. 4. 

Assumpsit on a promissory note for JIOOO, made by Sir Robert Salis- 
bury, in the usual form, dated 3rd of April, 1813, payable twelve months 
after date to the defendant, or order, and indorsed by the defendant to 
r*167n ^^^ plaintiffs. At the trial »before Gibbs, C. J., at the London 
L -I sittings after last term, it appeared that the plaintiffs' bankers in 
London were correspondents with the house of Sir E. Salisbury and Co., 
which house was a country bank, and considerably indebted to the plain- 
tiffs; and upon their requiring securities from Sir R. Salisbury, ten of 
his friends, at his instance, engaged to indorse promissory notes of 
£1000 each, at twelve months' date, as a security for the debt so due 
from Sir R. Salisbury to the plaintiffs. The defence to the action was 
want of notice of dishonour;' whereupon the plaintiffs tendered, as a 
waiver of such notice by the defendant, evidence of his admission, that 
he knew and expected that the payment of the note was not to be en- 
forced until after the estates of Sir R. Salisbury were sold, and only in 
the event of the proceeds of such estates not being sufficiently produc- 
tive ; and that, whatever might be the course of law, such was the under- 
Standing when the note was given : and that the defendant only gave the 
note as a further and collateral security; and for the express purpose of 
allowing time for the sale of the estates. This evidence was rejected by 
Gribbs, C. J., who consequently directed a nonsuit. 

Best, Serjt., on a former day, had obtained a rule nisi to set aside this 
nonsuit, and have a new trial, on the ground, that it was competent for 
the plaintiffs to show, that the note was not given for any valuable con- 
sideration, but merely as a guarantee, and so no notice was necessary. 

Lens and Fell, Serjts., now showed cause. — The case resolves itself 
into two questions; first, Whether the evidence was properly rejected? 
secondly. Whether, if it had been received, it would, under the circum- 
stances of the case, so control the import of the note as to render a no- 
tice of dishonour unnecessary ? As to the first point, on the face of the 
note, it appears to be an absolute unqualified promise of payment ; the 
defendant is the payee, and has indorsed it over to the plaintiffs, and, 
before the plaintiffs can call on such a defendant for payment, the law 
directs, that they must give him notice of the dishonour by the maker. 
On the face of the note, then, the defendant is entitled to notice of dis- 
r*1681 ''""""'■J ^^^ ^^^ °^^^ *°^ Hoare v. Graham, 3 Campb. 57, is a 
L J sufficient answer to the position contended for at the trial by the 
plaintiffs; namely, that they were at liberty to give in evidence a parole 
agreement, entered into at the time of making the note, which would 
operate as a waiver of such notice. In Hoare v. Graham, it was held, 
that, in an action on a promissory note, the defendant could not give in 
evidence a parole agreement, entered into when it was drawn, that it 
should be renewed, and that payment should not be demanded when it 



BILLS OP EXCHANGE. 123 

became due ; and Lord Ellenborough's decision in that case has not been 
shaken by any subsequent decision. So, here, evidence to control and 
contradict the express terms of the note, from the face of which no con- , 
elusion of the understanding between the parties can be drawn, was 
properly rejected. 

As to the second point, the case of De Berdt v. Atkinson, 2 H. Bl. 
336, even supposing it to establish the injurious principle for which the 
plaintiflFs contend, widely differs from the present case. There, the payee 
of a note lent his name to give it credit, and to enable the maker to raise 
money upon it, well knowing, at the time, that the maker was insolvent j 
and, upon the ground of the payee's knowledge of such insolvency, no- 
tice of dishonour was dispensed with in that case. But here, at the time 
of making the note, there is no insolvency of any of the parties. In 
Leach v. Hewitt, 4 Taunt. 731, it was held, that one who, without con- 
sideration, but without fraud, indorses a bill in which both the drawer 
and acceptor are fictitious persons, is entitled to notice of dishonour; and, 
in that case, Chambre, J., adopts Mr. Barnes's note on De Berdt v. At- 
kinson. Here, the maker of the note was an ostensible person, and the 
payee had a clear right of action against him upon his non-payment of 
the note ; the application of the plaintiffs should have been made to the 
maker in the first instance, for the defendant's undertaking is merely to 
pay the note in default of payment by the maker. It is true that, in 
Biokerdike v. BoUman, 1 T. R. 405, it was held, that if the drawer had 
no effects in the hands of the drawee, from the time the bill was drawn, 
it was not necessary to give the drawer notice of the dishonour of the 
bill; but Le Blanc, J., in Claridge v. Dalton, 4 M. & S. 231, says, 
"every new case makes one regret that *the rule in Bickerdike r,-i/.Q-i 
V. Bollman, for dispensing with notice, was ever introduced." In L J 
Nicholson v. Grouthit, 2 H. Bl. 609, it was held to be no excuse for not 
having presented a note in time for payment, that the defendant indorsed 
it to guarantee a debt from the maker; or, that the defendant knew, be- 
fore it was due, that the maker could not pay it, and had desired a 
banker, at whose house it was made payable, to send it to him that he 
might pay it. The note, in the present case, is indorsed to the plaintiffs 
by the defendant, as a security for the debt of the maker; the defendant, 
therefore, is a mere surety, and where a mere surety for the maker of a 
note indorses such note, the indorsee is bound to give notice of dishonour 
to the indorser of the note before he can sue him with effect. The 
second point, therefore, taken by the plaintiffs falls to the ground, even 
if the defendant be mistaken in the view which he has taken of the first 
point. 

Best, in support of his rule. — The plaintiffs do not impugn the case 
of Hoare v. G-raham, for they do not seek to introduce the evidence ten- 
dered at the trial for the sake of enlarging or contracting the instrument. 
In that case, the evidence contradicted the instrument which the defend- 
ant had signed : In this case, the evidence neither contracts, enlarges, nor 
contradicts the instrument; but merely shows the intention of the par- 
ties. This note was not given in the ordinary course of trade, for the 
defendant indorsed it merely as a surety for Sir R. Salisbury, nor had 



124 BOSS ON COMMERCIAL LAW. 

he any effects in Sir Robert's hands at the time of making it. A notice 
of dishonour is required in the common course of commercial bills and 
notes ; but the rule is widely different when applied to accommodation 
bills and notes. Bickerdike v. Bollman has not been overruled; and, 
unless De Berdt v. Atkinson be overturned, the defendant in this case 
cannot be held entitled to notice of dishonour; for the facts of both cases 
are similar. [Park, J., De Berdt v. Atkinson has been shaken in every 
printed book, and in the practice of every one at the bar; but I do not 
say that the two cases are similar.] In Leach v. Hewitt, the bill of 
exchange appears to have been given in the ordinary course of trade : 
Mansfield, C, J., there said, that the defendant had only placed himself 
P^, ^f.-. in *the common situation of an indorser, and the other judges do 
L J not sanction the adoption of the note on De Berdt v. Atkinson, 
by Chambre, J. In Nicholson v. Gouthit, De Berdt v. Atkinson is nei- 
ther mentioned nor shaken; and to assimilate this case to Nicholson v. 
Gouthit, it should be shown, that the defendant had said to the plaintiffs, 
" You need not wait till Sir E. Salisbury's estates are sold, bring the 
note to me, and I will pay it." The particular circumstances of this 
case divide it from all those cases where notes or bills have been given 
in the ordinary course of trade ; an d the evidence tendered was admissi- 
ble, because it was important for the decision of the matter under con- 
sideration Best cited, in conclu sion, the case of Kogers v. Stephens, 2 

T. E. 713. 

Dallas, J. — I am of opinion that the evidence tendered at the trial 
of this cause was properly rejected, considering the purpose for which it 
was offered, and the object to which it was intended to be applied. The 
plaintiffs, London bankers, were the correspondents of Sir Robert Salis- 
bury and Co., who were country bankers, considerably indebted to the 
plaintiffs, and ten gentlemen agreed to put their names each on the back 
of one promissory note for £1000, payable at one year, to be made by 
Sir E. Salisbury in their favour, and to be indorsed by each of them to 
the plaintiffs, as a security for the debt of the country bank. This was 
a,ccordingly done. It is then said, that at the time when these notes 
were made and indorsed, it was mutually understood, that payment 
should not be enforced until Sir Eobert Salisbury's effects were brought 
to sale, and that the plaintiffs entered into this contract with the defend- 
ant with a full knowledge of all these circumstances. One thing is to 
be observed ; if such were meant to be the understanding, it ought to 
have been expressed on the instrument ; but it is not expressed ; and, 
taking the instrument as it stands, it is a common promissory note, and 
requires that notice of dishonour should be given to the defendant in 
order to give the plaintiffs a right to recover against him. But, it is 
said, notice was dispensed with by the understanding which existed be- 
tween the parties; to which the answer is, that if parties mean to vary 
plTll ^^^ ^^^"^ operation of an instrument, *they ought to express such 
L J variance : if they do not express it, the legal operation of the in- 
strument remains. The effect of the evidence tendered would be to vary 
the note in question, and to control its legal operation, and such evi- 
dence, I think, is inadmissible. The case of Hoare v. Graham is similar 



BILLS OP EXCHANGE. 125 

to the present case, and ought to govern it. It was there held, that a 
party should not be permitted to give evidence of a collateral or con"- 
comitant circumstance j namely, that though the note was expressed to 
be payable on a certain day, payment was not to be called for on that 
day. If the clear principle, that what is expressed in writing, and that 
which is the best evidence of a contract, should alone constitute p^, -^ -, 
the contract, require any authority, the case of Hoare v. Graham L J 
confirms that principle. In this case, the defendant, being a mere surety, 
has a right to avail himself of the objection which he has taken ; and 
the case of De Berdt v. Atkinson is entirely different from the present 
case ; for there the defendant lent his name to give credit to a note, all 
the parties well knowing at the time of the making and indorsement, 
that the drawer was insolvent. I am of opinion, on looking to the sub- 
stance of this transaction, that the defendant was entitled to notice of 
the non-payment of the note by Sir K. Salisbury : that notice was not 
given ; and, I think, that the Lord Chief Justice was right in rejecting 
the evidence tendered at the trial ; and that the nonsuit directed by him 
ought to stand. 

Park, J. — I was of counsel in the case of Hoare v. Graham, and was 
assisted by a very learned man. We took the same objections which 
the plaintiffs in this case have taken, but we felt that we could not an- 
swer the question put by my Lord EUenborough, " What is to become 
of bills of exchange and promissory notes, if they may be cut down by 
a secret agreement, that they shall not be put in suit ?" It has been 
observed in favour of the plaintiffs, that they sought not by the evidence 
tendered at the trial, to contradict the note or limit the written contract; 
but, if I assure a promissory note payable at two months, and enter into 
a parol agreement that the note shall not be put in suit till the end of 
five years, or till the uncertain period of the sale of an estate, can it 
be contended, that such a parol agreement does not contradict and 
*Iimit the written contract into which I have entered? I am of ru-iiro-i 
opinion, that the defendant in this case was entitled to notice of '- -< 
non-payment of the note ; and that the evidence tendered by the plain- 
tiffs as a waiver of such notice was properly rejected. 

BuRKOUGH, J. — I am clearly of opinion, that the evidence offered at 
the trial ought not to have been received. Promissory notes are now 
placed on the same footing with bills of exchange, and, like bills of ex- 
change, are transferable from man to man. The note in question is not 
an accommodation note, but the transaction is sincere, and the indorser 
of such a note is as much entitled to notice as the indorser of any 
Other note. What is the nature of the evidence attempted to be in- 
troduced in order to affect this right to notice ? Its nature is to show, 
that the note, though on the fiice of it payable at one year after date, is 
not to be paid till after Sir Robert Salisbury's estates are sold, whatever 
the distance of that event may be: The exception in respect of accom- 
modation bills does not touch this case. In some cases the original vice 
of the note continues, and pursues it from hand to hand : but in this 
note there is no vice, and the indorser of it was entitled to notice of its 
dishonor by the maker. It would be of the most dangerous import if 

April, 1854 9 



126 KOSS ON COMMERCIAL LAW. 

evidence of this sort might be let in to cut down written instru- 
ments, ^nle discharged. 



II. — WOODBKIDGE v. SPOONER. 

Not. 24, 1819.— E. 3 B. & Al. 233. Eng. Com. Law Rep. vol. 5. 
Action on a promissory note, given by one deceased to plaintiff, for 
£100, dated 1st September, 1817, payable "on demand, for value 
received, and his kindness to me." Plea, general issue. At the trial 
before Abbott, C. J., at the sittings after last Easter term, the defendant 
gave in evidence, declarations of the testatrix at the time, that the note 
was not to be payable till after her death, and that it was to be given in 
m"^! **'^^i*io" *° ^ legacy of £20 left in her will. It appeared, also, 
L J that the testatrix was in poor circumstances, and that she was not, 
altogether, possessed of more than £300 or £400, and that she lived 
almost entirely at the plaintiff's house. Scarlett for the plaintiff, con- 
tended that this evidence ought not to be received. Abbott, C. J., 
received the evidence ; and being of opinion that it showed that the note 
was a testamentary paper, and ought to be so proved, nonsuited the 
plaintiff, giving him leave to move to enter a verdict for £100, in case the 
Court should be of a different opinion. Searlett having in last Trinity 
term obtained a rule nisi, accordingly. 

Marryat and Adams showed cause, and contended that this evidence 
was admissible. The note was merely evidence of a debt, and the parol 
testimony proved that there was no existing debt, but a mere promise of 
a sum of money after the decease of the testatrix, and the plaintiff could 
not have recovered upon it in her lifetime. Suppose a deed was delivered 
as an escrow, or a bill at two months given with an express agreement 
at the time that the party should, at the end of two months, be allowed 
to renew it; may not these circumstances be given in evidence, in case 
of an action brought on the deed or bill? If so, there was clearly 
enough to go to the jury, that this not& was agreed not to be demandable 
till after the "death of the testatrix. Tate v. Hilbert, 2 Ves. jun. Ill, 
is an authority to show, first, that evidence is receivable, of what takes 
place at the time of giving a promissory note ; and secondly, that a 
promissory note may be the subject of a donatio mortis causA. And 
Lawson v. Lawson, 1 P. Wm, 441, is to the same effect. 

Scarlett and Abraham, contra, relied on Hoare v. Graham, 3 Campb. 
57, and Free v. Hawkins, 1 B. Moore, 535. 

Abbott, C. J.— It struck me at the trial, that this was a testamentary 
promise in the nature of a legacy, and if so, that the plaintiff could not 
recover at law. I was led to this concluMon, in some degree, by the 
language of the first count of the declaration, in which-it was stated, that 
r*1741 ^^^ <Jeceased promised the *plaintiff that she would, at her de- 
•- -I cease, give him £100 more than a legacy of £20, which she meant 
to leave him. It is admitted, however, that unless the evidence was 
properly received, I ought not to have drawn that conclusion j and it 
seems to me now, that the evidence was not properly receivable. There 



BILLS OP EXCHANGE. 127 

is no doubt that a proper and sufficient consideration existed for this note ; 
and the evidence does not negative that part of the case. But its object- 
was to show that a promissory note, which in terms appeared to have 
been payable on demand, was agreed not to be payable till after the de- 
cease of the maker. Now, it is contrary to the rules of law to admit 
extrinsic evidence to show that the intention of a party executing a writ- 
ten instrument is different from that apparent on the face of the instru- 
ment itself. 

Bayley, J. — I am of opinion that this evidence was inadmissible, and 
that even if it were admitted, it ought not to prevent the party from re- 
covering. It appears, on the face of the note, to have been given for a 
sufficient consideration, and it could not have been the intention that the 
compensation should rest on the grouqd of a dtmatio mortis causd for 
then it would be revocable, hut that it should be secured by a binding 
instrument. Under these circumstances the note was given ; and it 
seems to me, that it was obligatory on the party making it, and that 
even if there were a secret understanding, that the note should not be 
presented for payment until after the decease of the maker, still it would 
be binding on her executors. Besides, here the note, on the face of it, 
purports to be payable on demand, and it would be extremely dangerous 
to allow a party, who has signed such an instrument, afterwards to say, 
that it was not so payable. It is a general and useful rule, that no 
parol evidence is admissible, to contradict that of which there is written 
evidence; and I think, therefore, that this evidence was not admissible. 

HoLROYD, J. — I am of the same opinion. This evidence was ad- 
duced, not to show a want of consideration, or that the consideration for 
the note was illegal, or that it was not delivered to the party to be made 
use of for his own benefit. *The utmost extent to which it p^-ii^c-i 
could go, was an attempt to prove that the note was not payable, L J 
as on the face of it it imported to be. This, therefore, was to contradict 
the note itself, which, by the rules of law, a party is prohibited from 
doing. Even if the evidence had been received, I think it would not 
make a material difference in the result. 

Best, J The parties in this case are bound by a written contract, 

and it is contrary to the first rules of law to admit parol evidence to vary 
or contradict it, and the only exception to those rules is, where a contract 
is illegal. I can see no solid ground of distinction between the present 
case and that of Free v. Hawkins. It is said that in this case there is a 
fraud on the legacy duty. But if this note was not revocable, it could 
not be a testamentary gift ; and if so, there could be no fraud on the 
legacy duty. I am, therefore, of opinion, that this nonsuit must be set 
aside, and that the verdict must be entered for the plaintiff. 

Judgment for the plaintiff. 



Ill — RIDOUT V. BRISTOW. 

Nov. 26, 1830.— E. 1 Tyr. 84. 
Assumpsit by the executor of a payee of the following promissory 



128 ROSS ON OOMMEEOIAL LAW. 

note made by the female defendant after the death of her first husband, 
John Ridout, junior, and before her second marriage, against Bristow, 
the second husband, and the female defendant as maker: — ith Sept. 

1824 Twelve months after date I promise to pay Mr. John Ridoul 

(the testator) or order one hundred pounds, value reoeivjed by my late 
husband. As witness my hand. Love Eidotjt." 

The sum of £32 was paid into Court on the counts for goods sold,, 
money lent, and money paid. At the trial before Mr. Baron, Bolland,, 
at, the Exchequer sittings after last term,, it appeared, that in 1820 the 
testator, John Eidout, his executor, William, and the intestate, John, 
r*17fi1 ^^^^ "■ ^^^^^^ ^^^ *^° ^°^^ ™ *trade together; and that the iur 
L J testate died in that year, considerably in debt to his father. A 
settlement of accounts between his widow and administratrix and the 
testator was entered on, but having failed, mutual releases were proposed 
to be executed between^ them. The testator refused to execute till the 
above note was given to cover several claims which he had paid, and 
might be called on to pay on his son's account. A list of these claims 
was made at the time of giving the note. 

For the defendants it was contended : 1st, That the note on the face 
of it negatived any consideration between the parties, and purported to 
be made for the debt of another : 2dly, That the note was in the nature 
of a penalty to indemnify testator as well for future as existing debts of 
his son, the intestate ; and that the plaintiff could only recover so much 
as was proved to have been so paid by his testator. The plaintiff then 
proved payment by the testator of four claims on behalf of intestate, 
amounting to about £99, one of which the defendant (the administratrix) 
disputed, as nqt paid on account of the intestate, but on her own account ; 
j^nd another as its subject-matter was forgotten; by the witness; payment 
of a third by testator was not distinctly shown ; and a fourth was 
clearly proved to be due from the intestate, and paid by testator. A 
deduction of £30 was also claimed for a debt which they urged John 
Bidout, senior^ had promised to pay. It was left to the jury to say what 
was really' due, and the verdict for the whole amount of the note, deduetf 
ing the £32 paid into Court. A rule having been obtained to set aside 
the verdict and enter a nonsuit on the points taken at the trial, 

Follett showed cause. — It was not necessary to show consideration for 
the note ; but if it was, a sufficient consideration appeared on the face of 
it, viz., value received by the deceased husband of the maker. Whether 
the note imported a consideration or not, the onus of showing the absence 
of it was on the defendant. Nor was it necessary that a consideration 
should be shown between the parties; for a note ■ expressed to be given 
by A. to B. to pay him the debt of C, may be sued on by B., 7 T. E. 
r*1771 ^^^' ^^^^ "^^^ reverses Eann v. Hughes, *7 T. E. 350, where 
L J an administratrix was sued on her personal undertaking to pay 
the debt of the intestate, and was held not liable, because no considera- 
tion appeared for the promise laid ; for the administratrix is here sued on 
the liability she has personally incurred by making a note, though to 
secure a similar debt. Childs v. Monins, 2 Br. & Bing. 460, shows 
that the female defend?int is personally liable, and need not have been 



BILLS OF EXCHANGE. 129 

sbo^n to be administratrix. In that case the defendants as executors 
jointly and severally promised to pay to the plainti£f, a creditor of the 
testator, his debt on demand with lawful interest. The Court held them 
personally liable, as the stipulation for interest imported a consideration 
of forbearance to sue ; but on this note nothing of the character of ad- 
ministratrix appears. [Bayley, B. — ^In Childs v. Monins, the exe- 
cutors, who were held personally liable, had bound themselves jointly and 
severally; a duty not cast on them by the law.] — However the release 
given by the administratrix recited the fact of her administration. Re- 
duction of the damages is not part of the rule, and as part of the consid- 
eration for the note was the testator's signature of a release to the 
administratrix, the items of payment by the testator need not be con- 
sidered. There is no proof that the intestate died without any assets, 
though he was indebted to the testator. But evidence of consideration 
was in faot given, though not tendered as such, but as evidence of private 
debts due from the intestate. Those were liabilities to arise in future on 
the testator's promise to pay thetu after the intestate's death. 

Edward Laiees, Serjt., and Barstoio, in support of the rule. — This 
note on the face of it negatives any consideration between payee and 
maker, and is merely a special agreement to pay the debt of a third 
person. In Childs v. Monins assets and forbearance were shown, and the 
note was given jointly and severally by the defendants as executors. 
Here the absence of assets was proved for the defendant ; forbearance 
oould not be given to the intestate, and was not stipulated for by the 
widow, nor did she appear to be administratrix on the note. The words, 
" value received by my late husband," appear on the evidence to mean 
value received in satisfaction *of debts which the testator might rjKiYo-i 
have to pay; therefore the note was for his indemnity. [Bayley, B. «- -■ 
If it was given to indemnify against specific debts, the burthen was on 
you to prove that they were not paid by the testator or the plaintifiF, as 
his executor, or that no value was given for the note, thus showing a 
failure of consideration.] — In Wain v. Walters, .5 East, 10, and the other 
cases on the statute of frauds, by which it has been followed, the written 
contract imported no consideration, but required it aliunde; now as 
between these parties, this note is within that Statute, and is not within 
the custom of merchants. In Childs v. Monins the defendants were 
primSi facie liable on the instrument as a note. Here an item, forming 
part of the consideration, and alleged to be due from intestate, was due 
from the widow personally, and only one payment was distinctly proved. 

Bayley, B. — This is an application to set aside a verdict fo^ the 
plaintiff for £68, plus £32, paid into Court, and to enter a nonsuit. If 
there is any evidence to entitle the plaintiff to recover, it is impossible to 
enter a nonsuit merely on the ground of a verdict being given for more 
than on the strict evidence it should have been. But I think there was 
evidence strong enough to sustaiia the verdict independently of the note. 
Supposing it to be given for the mere indemnity of the testator, there is 
evidence to bring the verdict to nearly £100. Now, this action is on a 
note, which prima facie imports a consideration without proof of consid- 
eration aliunde ; but it is said that as this note specifies some considera- 



130 ROSS ON OOMMEEOIAL LAW. 

tion, it imposes on the plaintiff the necessity of giving more than the 
usual proof, and is, in reality, void on the face of it, as not expressing the 
existence of assets of the intestate or other consideration. No authority 
is cited on the subject, but it is clear, that if, instead of a note, a creditor 
takes a written security which must express a consideration, that con- 
sideration must be proved to exist aliunde ; but if, by the form of the 
instrument, as in a note, the maker submits to be bound personally, and 
no consideration or evidence of it aliunde is necessary to its binding effect, 
no such proof will be necessary. Now, by this instrument, the defendant 
r*i 701 pi'oi'iises payment twelve months after *date, for value received 
L J by her late husband. She was, in fact, his administratrix ; but 
supposing she was not, and that she had agreed to give the note for a 
debt due by him, I think, under the circumstances, it would be binding. 
This is not a case of want of consideration, for a consideration fexists which 
makes it reasonable that this security should be given. In Popplewell 
y. Wilson, Stra. 264, a note expressed to be given for a debt due from a 
third party to the payee, was held good in the hands of a payee wholly 
alien to the maker, for the promise being absolute, the note was as nego- 
tiable as if it had been generally for value received. 

Besides, forbearance might be extended to the representative of the 
intestate, though it could not to him. It is said that an absence of 
assets appears, but though an ultimate failure of consideration might 
take place owing to the intestate's debts to his father, it does not appear 
that the former died without property, and we do not know whether 
other debts existed. Then, if the administrix takes on herself to give 
a security, which may induce forbearance to her, she cannot, at a distant 
period, call on the holder of that security to prove she had assets, for by 
this note she admits assets, and invites inquiry into that fact. The plain- 
tiff is not driven by the note to prove assets of intestate in the hands of 
the administratrix, in support of his claim, and the administratrix would 
not be allowed to prove that she had none. The cases on the statute of 
frauds do not apply; nothing there appeared to support the promises, for 
there is no implied benefit in undertaking to pay the debts of another, 
and a simple promise to pay such a debt where the party is under no 
legal or moral liability to do so, is reasonably held to be nudum pactum. 
Here, on the other hand, as the instrument of itself binds the maker, 
admits assets of intestate, and in its probable consequence induces for- 
bearance, I am of opinion that consideration must be taken as existing, 
in case the party is prima facie liable to pay. In prudence the plaintiff 
should have shown what precise sums the note was intended to secure, 
but is not bound to do so. For resistance may be made to an action on 
a bill or note, on the ground of want, failure, or illegality of considera- 
r*1801 *'°"' ^^^ ^ apprehend that in the case of a note, as *well as of 
L , J any other written instrument, evidence cannot be given of a con- 
sideration, differing from, or inconsistent with, the tenor of the written 
instrument. In Kawson v. Walker, 1 Stark. 361, an action by payee 
against maker of a note payable on demand, proof was offered that the 
note was agreed not to be put in suit except in a certain event. Lord 
EUenborough rejected the evidence, saying, "I am ready to receive evi- 



BILLS OF EXCHANGE. 131 

dence to sbow the consideration illegal, but I cannot receive parol evi- 
dence inconsistent with the terms of the note." Again, in an action by 
indorsee against indorser of a note payable two months after date, evi- 
dence was offered, that on defendant's refusal to indorse, a bargain was 
made between the plaintiffs and him, that plaintiffs should renew the 
note when due, but Lord EUenborough refused to admit proof inconsist- 
ent with the written instrument. But suppose the defendant to have 
been entitled to prove a consideration different from that expressed on 
the note, it was for him to show a failure of consideration in any item 
which formed in part a ground for the note. Now, he does not show 
whether the item of which the origin was unexplained by the plaintiff's 
witness, was due or not. Again, if the note was given for indemnity 
against specific debts, the creditors might be called to show that they had 
not received payment. One item due from intestate, was clearly paid 
by testator for him ; and though there is no distinct evidence of such 
payment of another similar item, whilst another claim paid by testator 
was due from the administratrix personally, and not from the intestate, 
the plaintiff has had no notice of such an inquiry under the present 
rule, which is not directed to the reducing the verdict, but to a nonsuit. 
This being a note prima facie binding on the female defendant as widow 
and administratrix, it is wholly different from any agreement which is 
subject to the statute of frauds, and if it was given to a certain degree 
for the testator's indemnity against future claims on the intestate's ac- 
count, that has not been made out to the extent necessary on this rule. 

GrARRow, B., concurred. 

Vauqhan, B. — This rule was obtained on the ground thatp^^Q^-. 
*the note was bad on the face of it, as payable on a contingency, L J 
and therefore was not negotiable within the custom of merchants; but 
with the exception of the words " by my late husband," it is in the 
usual form, and imports a consideration, as to the proof of which those 
words make no difference. The plaintiff, therefore, was entitled to a 
verdict without proving consideration. If the plaintiff had been com- 
pelled to give such evidence, the defendants as between these parties 
might have proved a want or failure of it, but it is not necessary to de- 
cide whether they might have proved a different consideration. 

BoLLAND, B. — If Popplewell v. Wilson had been cited at the trial, I 
should not have given leave to move for a nonsuit. Besides, the evidence 
showed an actual consideration, and it was for the jury to say, whether 
the items alleged to have been paid by the father were so satisfied. 

Bule discharged. 



1. The case Rawson v. Walker, 1 Starkie, 361, was an action on a promissory 
note for the payment of £66 on demand to the plaintiffs. The defendants pro- 
posed to produce evidence that they were liable on a contingency only, and 
contended that it was competent for^them to show what the real terms were on 
which the note was given. Lord EUenborough observed, — " I am ready to ad- 
mit any evidence for the purpose of showing that the consideration of the note 
was illegal, but I cannot receive parol evidence inconsistent with the terms of 
the note. By this instrument the defendants undertake to pay the amount of 



132 ROSS ON OOMMEEOIAL LAW. 

the note upon demand, and they cannot adduce evidence to show that it was 
not to be so paid, but upon a contingency only." .• „„ „ r.,^„;„ 

2. The case of Hoare v. Graham, 3 Campb., 51, was an action on a promis- 
sorv note, by an indorsee against the payee, who had indorsed it to Gnll anj 
Son,andb/them it had bten indorsed to the plaintiffs. The defence set up 
was that the note had been drawn as a collateral security for certain advances 
r^',. made by the *plaintiffs to Grill and Son; that at the framing of the 
[ l^^J note the defendants refused to indorse it, unless the jJaintiffs would 




ins tor a renewal, ijora cjuenoorougm. — j. """ " ""»"'» - ■- — 

thfssort. What is to become of Ms -of exchange and promissory notes, if 
they may be cut down by a secret agreement that Oiey shaU not be put m suit/ 
The parol condition is quite inconsistent with the written instrument. This 
purports to be a promissoi-y note payable two months after date. Xou say it 
was not payable at the end of that time, and that when the two months had 
expired the payees, instead of the money were to have another promissory note. 
I will receive evidence that the note was indorsed to the plaintiffs as a trust; 
but the condition for a, renewal entirely contradicts the instrument which the 
defendants have signed. Such an agreement rests in confidence and honour 
oiJy, and is not an obligation of law. There may, after the bill is drawn be a 
banding promise for a valuable consideration to renew it when due ; but it tbe 
promise is contemporaneous with the drawing of the bill, the law wUl not 
enforce it. This would be incorporating with a written contract an inconpi- 
oua parol condition; which is contrary to first principles. There must be a 
verdict for the plaintiffs. ■ • i. 

3. The case of Moseley v. Hanford, 10 B. & C. 729, was an action against 
the maker of a promissory note payable on demand, A* the trial evidence 
was led by the defendant to show that at the time the note was made it was 
agreed that it should not be paid unless a certain event happened. A verdict 
having been found for the plaintiff, and a motion having thereafter been made 
for a new trial, on the ground that the verdict was against the evidence, the 
Court of King's Bench intimated a doubt whether forwal evidence could he 
given to restrain the effect of a promissory note absolute on the face of it, 
anid referred to Woodbridge v. Spooner, as an authority to the contrary. Park, 
J., observed, that every bill or note imported two things — value received, and 
an engagement to pay the amount on certain specified terms ; that evidence 
was admissible to deny the receipt of value, but not to vary the engagement 
The Court having taken time to consider, Lord Tenderden thereafter delivfireft 
the judgment of the Court, and observed, — When this application for a new 
trial was made, it occurred to the Court, that the evidence given on behalf of 
the defendant ought not to have been received, on the ground that evidence of 
an agreement, that the note was not to be put in suit upon a given event hap- 
pened, was not admissible ; the effect of it being to contradict by parol the 
l^,„„-|note *itself. And, upon consideration, we are of opinion, that, upon 
1- J principle as well as authority, that evidence was not admissible. Several 
cases to that effect are collected in Selwyn's Nisi Prius, 394." See also Adams 
T. "Wordly, 1 M. & W. ZU. 

4. The rule of Jaw now illustrated is applicable to the law of England only, 
and has no place in the law of Scotland. In that law the rule is absolute, that 
writ can be taken away by writ or oath only, and that parol testimony is inad- 
missible to contradict, vary,, or control in any way, a written instrument. To 
this rule there is no exception in case of bills, or notes, unless where the instru- 
ment has been obtained by force or fraud, and in the latter case the holder 
must have been privy to the fraud. It must always be borne in mind, how- 
ever, that the law of England differs from the law of Scotland in this particular, 
that in an action upon an agreement not under seal a consideration must bg 
proved. 



BILLS OF EXCHANGE. 133 



WHERE A BILL IS DEAWN SO CARELESSLY AS TO ADMIT OF AN ALTERA- 
TION IN THE SUM WITHOUT DETECTION, THE PARTIES TO THE BILL 
WILL BE LIABLE TO THE ONEROUS HOLDER OF IT FOR THE FULL 
AMOUNT AS ALTERED; BUT IF THE ALTERATION IS SO OBVIOUS AS 
NOT TO DECEIVE A PARTY OF ORDINARY VIGILANCE, OR IP THE 
ALTERATION IS OF SUCH A NATURE AS THAT THE PARTIES TO THE 
BILL ARE IN NO WAY TO BLAME, THE BILL WILL BE GOOD FOE THE 
OEIGINAL AMOUNT ONLY. 

HALL V. FULLER. 

June 10, 1826. — E. 5 B. & 0. T50. B. 0. L. E. vol. 11. 

Assumpsit to recover 197Z. as money had and received by the defen- 
dants to the use of the plaintiffs. At the trial before Abbott, C. J., 
at the London sittings after Hilary Term, 1824, the jury found a verdict 
for the plaintiffs, subject to the opinion of the Court on the following 
case : — 

The plaintiffs are merchants in the city of London, having at the time 
of the transaction in qjiestion an account with the defendants as baakers. 
Oo the 25th or 26th of August, 1823, Mr. 8. Hill applied to J. Hall, 
pne of the plaintiffs, for the loan of a check for 3^., stating at the time 
it was for a friend to send into the country, upon which Mr. Hall drew 
and delivered to S. Hill the check upon the defendants, using for that 
purpose *one of the printed forms with which the defendants p^- „ .., 
supply their customers. The sum for which this check was L J 
drawn was written by Hall in words at length, in the body of the check, 
and also in figures, the latter being in the same line with his signature. 
Mr. Hill had been induced to apply for the loan of the check by one 
Wagstaff, who had applied to him for such a check, and Hill having 
obtained it, handed it over to Wagstaff. Wagstaff expunged the dates, 
the figures, and the words three pounds, and also the figures SI. 0«. Od., 
and substituted the words two hundred pounds and 2001. in figures, bat 
in such a manner that no one in the ordinary course of business could 
have observed it. The check so altered was presented by or on account 
of Wagstaff to the defendants for payment, on the 29th of August, on 
which day the balance in their hands on the account of the plaintiffs 
was only 1832. 15s. 5d. The defendants paid the amount of the check 
as altered, and having a day or two afterwards received funds to cover 
the amount overpaid on the 29th of August, they claimed to retain the 
whole sum of 2002. on account of the check drawn and paid under the 
foregoing circumstances. 

F. Pollock, for the plaintiffs. — The plaintiffs are entitled to recover 
the whole amount of the check. First assuming that the defendants 
have not been guilty of any negligence, the loss must still fall upon 
them, for the altered check was not the check of the plaintiffs, and there- 
fore the defendants paid the money without any authority. There is no 
difference in principle between this case and any other forgery. Sup- 



134 ROSS ON COMMERCIAL LAW. 

pose the body of a draft had been in the handwriting of the plaintiffs, 
but their signature had been forged, there can be no doubt that if the 
bankers had paid such a draft they would be liable. Or suppose that it 
■was made payable to a special payee, and his name had been forged, and 
the bankers paid it to the wrong person, they would have been liable. 
There is no direct authority in our law upon the subject, but the very 
point is discussed in Pothier's Treatise du Contrat du Change, Part I. c. 
4, s. 99, p. 59. It assimilates a case like the present to that of a person 
employed to execute an order for another {Je contrat de mandat!) There 
r*18'i1 ^^^ employer is bound to reimburse the *employee all his expen- 
L -I ses to which the employment or order gives rise, (provided the 
employee does not, by his own negligence, disburse more than he ought.) 
But he distinguishes between expenses occasioned in the execution of the 
order or employment, {ex causa mandati,\ and those which are incurred 
accidentally in the course of the employment or order; and, ultimately, 
he comes to the conclusion that when a banker pays the full amount of 
a bill fraudulently altered by the holder, the sum paid beyond that for 
which it was originally drawn is not a payment made " ex causa mandati 
sed occasione tantum," the subsequent fraudulent alteration of the bill 
which led the banker into error, and which caused him the loss of the 
sum he had unduly paid, being an accidental circumstance which neither 
had been, nor could be foreseen, and against which the drawer cannot 
be supposed to have intended to indemnify the banker. 

In Scholey v. Ramsbottom, 2 Oamp. 485, a cheque by a customer 
upon his bankers, and which he afterwards cancelled by tearing it into 
several pieces, was paid by them under circumstances which ought to 
have excited their suspicion, and induced them to make inquiries before 
paying it ; and it was held that they could not take credit for the amount. 
Here the bankers have been guilty of negligence. The drawer of a bill 
of exchange has not any means of discovering whether the instrument 
which he issues to the world be subsequently fraudulently altered ; the 
banker has some means, and if he is deceived, must be responsible. 

Goulhurn, contra. — This case is one of novelty and great importance 
to bankers, who, if the defendants are held liable, will be exposed to con- 
stant hazard without any means of prevention. For if the signature to 
a check be genuine, a banker is bound at his peril to pay it, although 
(as frequently occurs) every other part of it be written in a strange hand. 
And now it is contended, that after he has ascertained the signature to 
be valid, he is further bound to notice any alteration in the body of the 
cheque itself, however minute, or however skilfully effected. It is said 
that any material alteration in instruments of this nature after they are 
P1861 ^"^^^"^ ^^^^ render them void, but *that is too broad a position.' 
L J In Kershaw v. Cox, 2 Esp. 246, a most material alteration in a 
■ bill, viz., the insertion of the words « or order," was held by Lord Ken- 
yon not to vitiate the bill. And as to an alteration in the sum for which 
the bill is drawn, Soacchia's authority, as cited by Pothier in the passage 
referred to, is express, that in a case like the present, the drawer, and 
not the drawee, must bear the loss : although Pothier, after stating the 
arguments on both sides, inclines himself to the contrary opinion. As 



BILLS OF EXCHANGE. 135 

to a supposed analogy between deeds and bills, Mr. Justice Buller, in 
Master v. Miller, denies that there is any such, and states conclusive 
reasons for his opinion ; and it is clear that such an alteration in a deed 
as that which took place in the bill in the case of Kershaw v. Cox, would 
have made the deed void. No argument, therefore, can be derived from 
such analogy. In Scholey v. Ramsbottom, there was everything to cause 
inquiry and suspicion on the part of the bankers. The check had been 
torn in four pieces, and pasted together again, and when presented was 
obviously defaced and dirty, which was the express ground of Lord 
Ellenborough's decision : whereas here it is found that the check " was 
altered in such a manner that no one in the ordinary course of business 
would have observed it," which makes the whole difference, and converts 
that case into a strong authority for the defendants. Then as to negli- 
gence, it is here altogether on the side of the customer. Griving, or 
rather lending, as he did this check for so trifling an amount to another 
person for the purpose of- being sent again to a third in the country, was 
in direct violation of the compact which must be implied between banker 
and customer — viz., that the latter shall not send abroad his name and 
signature in this unguarded mode, but shall use them only with due 
caution, and for the boncl fide purpose of drawing out his funds for his 
own occasions. In Kussel v. Langstafie, it was holden that a person 
signing his name to a blank stamp was liable for any sum afterwards 
inserted thereon. In that case it was argued (aa in this), that a note so 
filled up was not the note of the party who had signed the blank stamp ; 
but it was held by the Court, that a man thus sending abroad his name 
and signature, must be responsible for all the consequences. So here 
*the plaintiffs have thought fit to lend their name, owing nothing p^^ „_^ 
to the party to whom the check was given, and being told by L J 
him at the time that it was not for his own use, and that he should not 
present it for payment. Under these circumstances, it follows that the 
plaintiffs must bear the loss, and not the bankers, who were not guilty 
of any negligence, and could not by any care or caution on their part 
detect the imposition. 

Abbott, C. J. — I am of opinion that the plaintiffs are entitled to 
recover. Bankers can only charge their customers with sums of money 
paid pursuant to order. Here, unfortunately, the bankers have paid 
nlore than the order authorised them to do ; for by that they were directed 
to pay no more than £3. I have no doubt the bankers cannot charge 
their customer beyond that sum. The plaintiffs are therefore entitled 
to the judgment of the Court for the excess. 

Bayley, J. — The banker, as the depositary of the customer's money, 
is bound to pay from time to time such sums as the latter may order. 
If, unfortunately, he pays money belonging to the customer upon an 
order which is not genuine, he must suffer, and to justify the payment, 
he must show that the order is genuine, not in signature only, but in 
every respect. This was not a genuine order, for the customer never 
ordered the payment of the money mentioned in the check. 

Judgment for the plaintiffs. 



136 EOSS ON OOMMBEOIAL LAW. 

II. — YOUNG V. GKOTE. ' 

June 18, 1827— B. 4Bing. 253. B. 0. L. E. Tol. 13. 

An arbitrator, to wliom disputes between the above parties had been 
referred, found by his award that G-eorge G-rote the elder, William Wil- 
loughby Prescott, George Grote the younger, and William George Pres- 
cott, were entitled to retain the sum of threfe hundred and fifty pounds 
two shillings and threepence, the only disputed item in an account 
r*1881 '■^^^"^^ '° ™ *^® submission, *and that Peter Young had no 
L ^°°i legal claim or demand wha.tsoever against them in respect of that 
item ; but stated upon the face of his award the following facts, in order 
to enable Peter Young to take the opinion of the Court of Common 
Pleas, whether, under the circumstances, he ought to bear the loss of 
that sum. 

Before and in the year 1826, George Grote the elder, W. W. Prescotl^ 
G. Grote the younger, and W. G. Prescott, carried on business in Lon- 
don, as bankers, under the firm of Grote and Company. 

Peter Young, before and in the year 1826, kept easli with, and was in 
the habit of drawing upon Grote and Co. drafts or orders for sums of money 
on paper, issued by the latter, containing printed forms of drafts, having 
in one line the names of the bankers, in the second line the words " pay 

or bearer," and at the bottom of the draft the letter "£;" & 

Sufficient space being left between the second line and the bottom of the 
draft for a third line. 

On the 12th August, 1826, P. Young having occasion to quit his 
home upon . hnsiness, by which he was likely to be detained for several 
da,ys, signed with his name five of these printed checks, without inserting 
in them any dates or sums of money, and he left them in the possession 
of his wife, and desired her, in his absence, to have them filled up for 
such sums as the purposes of his business mig"ht require. 

On the 19th August Mrs. Young, in order to pay the wages of dif- 
ferent persons employed by her husband, required the sum of fifty pounds 
two shillings and threepence, and she delivered one of the checks so 
signed by P. Young to William Worcester, a clerk of P. Young, and 
desired W. Worcester to fill it up with the sum of fifty pounds two shil- 
lings and threepence. Worcester accordingly filled it up with that sum, 
and showed it so filled up to Mrs. Young, and she desired him to get it 
cashed, but the check, when it was so filled up and shown to Mrs. Young, 
presented the following appearance : — the first line contained in print the 
names of the bankers ; the second line contained the words f)ay wages or 
bearer, the word wages only being in writing, and the third line con- 
tained the words fifty pounds and the figures 2s. 8(£.; but the word fifty com- 
r*1891 "^^""^^ *™ *^® middle of that third line, and with a small letter, so 
L -I that ample space in that line was left for the insertion of other 
words before the words fifty : and there was at the bottom of the draft 
the figures 50. 2. 3., but the figure 5 was at a sufficient distance from 
the letter £ to allow another figure to be inserted between it and the letter 
£. After Worcester had shown the draft to Mrs. Young in this state, 



BILLS OP EXCHANGE. 137 

he, without any authority from her or from Peter Young, altered the 
sum mentioned in the draft to three hundred and fifty pounds two shil- 
lings and threepence, by inserting in the third line of the draft, before 
the word fifty the words three hundred and, and by introducing at the 
bottom of the draft, between the letter £. and the figure 5 the figure 3 ; 
and this alteration was made in such a manner that no person, using due 
and ordinary diligence, could have discovered that it had been made im- 
properly after the draft had been once filled up for another sum, and 
signed by the drawer. The' check so altered was presented by Worces- 
ter to Grote and Co., and they paid to him, in pursuance of the order 
contained in it, and which purported to be that of P. Young, three hun- 
dred and fifty pounds two shillings and threepence ; and in an account 
delivered by them to P. Young, they debited him with that sum. He 
objected to that debit, alleging that his draft was only for fifty pounds 
two shillings- and threepence. 

The arbitrator thought that it was his draft for that sum only, but he 
thought, also, that he had been guilty of gross negligence, by causing his 
draft to be delivered to Worcester, (in whose handwriting the body of it 
had been filled up,) in such a state that the latter could and did, by the 
insertion of other words, make it appear to be the draft of Peter Young 
for the larger sum ; and that as he, partly by his negligence, had caused 
the bankers to pay the larger sum, he was bound to make good to them 
the loss, which, by reason of his negligence, they had sustained by pay- 
ing that sum. If the Court of Common Pleas should think that opinion 
wrong, then he awarded that Peter Young was entitled to receive from 
Grote and Co. the sum of three hundred pounds, and ordered accordingy. 

Whereupon a rule was'obtained by Wilde, Sergeant, calling upon Grote 
and Co. to show cause why they should not pay *Young ;6800. [-^, „„.. 
Wilde cited Hall v. Fuller, where a check, which was drawn by L -1 
a customer upon his banker for a sum of money described in the body of 
the check, having afterwards been altered by the holder, who substituted 
a larger sum for that mentioned in the check, but in such a manner that 
no person, in the ordinary course of business, could observe it, and the 
banker paid the larger sum, the Court held, that he could not charge the 
customer for anything beyond the sum for which the check originally 
was drawn. 

Taddy, Sergeant, showed cause ^Young acted with negligence in 

leaving a blank check to be filled up by his agent; and his agent acted 
with greater negligence in permitting the sums to be written on, the 
check in such a position as to admit of the insertion of other words with'- 
out exciting suspicion. Grote and Co., on the other hand, acted in the 
ordinary way of business, for they could not refuse to cash a check signed 
by their customer. In such a case the loss must fall on the customer. 
The very question! had been considered by Pothier, who said, — after dis- 
tinguishing between payments made ex causa mandati, and ex occasione 
mandati, and holding, contrary to Scaoohia, that in general the banker 
ought to be responsible where he pays, in consequence of a fraud practised 
by the holden, — "dependant &i c'etait par la faute du tireur que le 
banquier eut etse induit en erreur, le tireur n'ayant pas eu le soin d'ecrire 



138 ROSS ON COMMERCIAL LAW. 

sa lettre de manifere Sl pr#venir les falsifications; puta, s'il avait ecrit en 
chiffres la somme tiree par la lettre, et qu'on eut ajoute zero, le tireur 
serait en ee cas tenu d'indemniser le banquier de oe qu'il a souffert de la 
falsification de la lettre, & laquelle le tireur par sa faute a donne lieu; et 
c'est a ce cas qu'on doit restreindre la decision Soacohia." 

Hall V. Fuller is clearly distinguishable. In that case Hall had given 
a check to his friend properly filled up for three pounds : his friend 
handed it over to another, vrho, by a chemical process, expunged the 
original sum and inserted a larger. But Hall having by his mode of 
signing and drawing the check given no opening to the fraud, the conse- 
quences of it fell, in the usual course, upon the banker Fuller, who, 
being deceived, paid a large sum without authority. So also in Smith 
P^-n^, V. Mercer, *6 Taunt. 76, the drawer had done nothing incorrect; 
[ J and the bankers were held responsible for not knowing his hand- 
writing. In the present case. Young himself, or his agent, the wife, 
was the cause of the bankers' being misled ; Young, therefore ought to 
bear the loss. 

Wilde. — It is the constant practice of merchants to have checks 
signed in blank : they could not carry on business without doing so. 
Young's authority terminated when his wife assented to filling up the 
check with £50, 2^. What was written afterwards was a forgery, for 
the consequences of which the bankers were liable in the usual way. 
There was no negligence in Young, for his agent saw the smaller sum 
duly written upon the check, and both she and Young acted bonS, fide. 
Hall V. Fuller is in point ; for it can make no difference whether the 
forgery be eifected by interpolation or by expunging. 

Best, C. J Although I entertain no doubt on the subject, this is a 

case of considerable importance, and the question has been properly raised 
by the arbitrator. Undoubtedly, a banker who pays a forged check, is 
in general bound to pay the amount again to his customer, because, in the 
first instance, he pays without authority. On this principle the two 
cases which have been cited were decided, because it is the duty of the 
banker to be acquainted with his customer's hand-writing, and the banker, 
not the customer, must suffer if a payment be made without authority. 

But though that rule be perfectly well established, yet if it be the 
fault of the customer that the banker pays more than he ought, he can- 
not be called on to pay again. That principle has been well illustrated 
by Pothier, in commenting on the case put by Scacohia : — " Cependant, 
si c'etait par la faute du tireur que le banquier eut ete induit en erreur, 
le tireur n'ayant pas eu le soin d'ecrire sa lettre de manifere a prevenir 
les falsifications ; puta, s'il avait ecrit en chiffres la somme tiree par la 
lettre, et qu'on eut ajoute zero, le tireur serait en ce cas tenu d'indem- 
niser le banquier de ce qu'il a souffert de la falsification de la lettre, a 
laquelle le tireur par sa faute a donne lieu; et c'est a ce cas qu'on doit 
restreindre la decision de Soacchia." 

r*1921 *■"■" *^^ present case, was it not the fault of Young that Grote 
L -I and Co. paid £350 instead of £50 ? Young leaves a blank check 
in the care of his wife. It is urged, indeed, that the business of mer- 
chants requires them to sign checks in blank, and leave them to be filled 

/ 



BILLS OF EXOHANQB. 139 

up by agents. If that be so, the person selected for the care of such a 
check ought at least to be a person conversant with business as well as 
trustworthy. But it was not likely that the drawer's wife should be 
acquainted with business, and she acting as her husband's agent, ought 
• not to have trusted to receive the contents of the check any person with 
whose character she was not perfectly acquainted. If Young, instead of 
leaving the check with a female, had left it with a man of business, he 
would have guarded against fraud in the mode of filling it up; he would 
have placed the word fifty at the beginning of the second line, and would 
have commenced it with a capital letter, so that it could not have had 
the appearance of following properly after a preceding word : he would 
also have placed the figure 5 so near to the printed & as to prevent the 
possibility of interpolation. It was by the neglect of these ordinary pre- 
cautions that Grote and Co. were induced to pay. The case of Smith v. 
Mercer bears no resemblance to the present; but Chambre, J., grounded 
his judgment on the same principle as that on which we now proceed. In 
Hall V. Fuller, the check was properly drawn by the plaintiff in the first 
instance ; the words which he had written were expunged, and supplied 
by others in a different handwriting, and the alteration was made, not by 
the plaintiff's clerk, or a person improperly trusted by him, but by an 
entire stranger, who accidentally became possessed of the check, if the 
banker had been discharged in that case, there could be none in which 
he would be liable. We decide here on the ground that the banker has 
been misled by want of proper caution on the part of his customer. 

Park, J I am of the same opinion. Hall v. Fuller is clearly dis- 
tinguishable from the present case ; and though the Lord Chief Justice 
is reported to have expressed himself somewhat generally, his expressions 
must be taken to have reference to the facts of the case. But Bayley, 
puts the case on the *principle on which I coincide with the rijcinq-i 
Lord Chief Justice here. " The banker, as the depositary of the L J 
customer's money, is bound to pay from time to time such sums as the 
latter may order. If, unfortunately, he pays money belonging to the 
customer upon an order which is not genuine, he must suffer." Can any 
one say that the cheek signed by Young is not a genuine order ? I say 
it is. The checks left by him to be filled up by his wife, when filled up 
by her, become his genuine orders. However, the arbitrator finds 
expressly that he was guilty of negligence; and I concur in that opinion. 
He leaves blank checks in the hands of his wife, who was ignorant of 
business; but having left them with her to be filled up as the exigency 
of the moment might require, they become, upon her issuing them, his 
genuine orders. 

BuRiiorrQH, J. — The arbitrator attaches no blame to the bankers, and 
it is manifest that the legal blame attaches to their customer. First, he 
leaves a blank check with his wife as agent for him, and she then causes 
it to be filled up in an unusual way ; — at least a line might have been 
drawn to fill up the interval before the word fifty. The blame is all on 
one side. 

G-AZELEE, J. — The arbitrator has not found that the clerk was in the 
habit of filling up checks for his employer, or of going to the bankers to 



140 BOSS ON OOMMEROIAl LAW. 

receive money on his account. Those circumstances might have strength* 
ened the case ; but there certaJnly was great negligence on the part of 
Young, and therefore the rule must be Discharged.. 



[«194] *III. — PAGAN V. WYLIE. 

Jiine 19, ir93.— S. M. 1660. 

A HOLOGRAPH bill drawn by John March, after being accepted, by 
James Hunter, and indorsed by Alexander Pagan, was put into the 
hands of the drawer,; in order to raise money on it, who, there was reason 
to believe, taking advantage of a blank in the body of the bill fraudun- 
lently altered its amount from eight to eighty-four pounds sterling,, by 
adding the letter y to the end of the word eight, and the word four imme- 
diately after it. 

The part thus added had rather a crowded appearance, and seemed to 
be written with different ink, but in the same hand with the rest of the 
bill. 

After this operation, March discounted the bill for its full value with 
Alexander Wylie, agent at Dumfries for the Paisley Union Bank. 

Before the bill became due March had fled the country. 

Wylie having charged Hunter and Pagan for payment of the £84, they 
obtained a suspension, and the Lord Ordinary afterwards reported the 
cause, on informations. 

The arguments of the Bar were in a great measure confined to the 
special circumstances of the case. In particular, the charger endeavoured 
to establish, that Hunter and Pagan had been in the practice of entrust- 
ing March with bills, blank in the sum, leaving him to fill it up as occa- 
sion should require ; and from that, and a variety of other specialties^ he 
contended that they were liable for the full sum for which he had boni 
fide discounted it. 

The suspenders endeavoured to obviate the conclusions drawn from 
these facts, and at the same time to assimilate the fraudulent interpok.- 
tion to the case of forgery or vitiation : and thence they argued, — Pirsl^ 
That the alteration being a vitium reale, the bill could not be sustained 
as a document of debt : Secondly,. That as the alteration was visible, 
Wylie was equally negligent in not discovering it, as they were in pus- 
ting their names to a bill with a blank m gremio; and that theretbre 
r*1951 *^°^^ parties being in pari cam, where the loss had fallen, there 
L -I it must remain. 

The Court « Repelled the reasons of suspension." 

The Court, waiving the specialties which occurred in the cause,, went 
upon the following grounds :— Where a blank is left in a bill, sufficient 
to admit the insertion of part of one word, and the whole of another) as 
in the present case, any person who puts his name upon it, whether as 
drawer, acceptor, or indorser, and trusts it in the hands of another, and 
particularly of the person by whom it was written, in order to its being 
passed by him into the circle, must be liable for the consequences, in the 



BILLS OF EXCHANGE. 141 

same manner as if it had been left blank in the sum altogether, it being 
nearly the same thing whether the blank be total or partial. And 
although, upon a narrow inspection, a small crowding of the letters, and 
some little difference in the colour of the ink, might have been perceived, 
both were too trifling to put the discounter on his guard ; even if he had 
hesitated, and made inquiry into these circumstances, he might have been 
told, without putting him in mala fide, that there had been originally a 
blank left, in order to be filled up with the sum which might be wanted. 
The circumstance of leaving a blank must be held as a tacit mandate 
from the parties whose names were upon the bill, entrusting the holder 
with the power of filling it up; and therefore the present case differs 
widely from a forgery or vitiation, for there one writing is converted into 
another, without the consent of the parties, either express or implied. 



IV. — GRAHAM v. GILLESPIE. 

Jan. 27, 1795.— S. M. 1453. 

On the 24th October, 1791, William Gillespie and Company, in con- 
sequence of a consignment of goods made in their hands, accepted a bill, 
holograph of Willianl Eobb, in the following terms : — 

"Glasffow, 24 Juli/, 1791. [*196] 
£ 68, 10s. Stg. 

Six months after date, pay to us or 
order, at the shop of Mr. Aadrew Sibbald, the sum of 
Fifty-eight pounds ten shillings Stg., value received 
from 

David Robb & Co. 
To Messrs. Wm. Gillespie & Comp. Wm. Gillespie & Co. 

Linen Printers, Anderston. 

William Robb afterwards increased the sum in the bill to £458, 10s., 
by inserting the figure " 4" between the •"£" and the " 5" at the top 
of the bill; drawing a score through the word "or," at the end of the 
first line; adding the words " or to our" at the beginning of the second ; 
and the words " Four hundred &" at the beginning of the third ; all 
which he was enabled to do, in consequence of the blank being left be- 
tween the " £" and the " 5," and of there being no writing on the stamp. 
The fraud was so well executed, that it could scarcely have been disco- 
vered, unless by a person aware of it ; who might, on a narrow inspec- 
tion, have perceived, that the words added were written a little differently 
from those which followed them, and not quite in the same line. 

The bill as altered presented the following appearance : — 

Glasgow, 24 July, 1791. 
je458, 10s. Stg. 

Six months after date, pay to us e5 
or to our order at the shop of Mr. Andrew Sibbald, the sum of 
April, 1854.— 10 



142 EOSS ON COMMEKOIAL LAW. 

Four Hundred & Fifty Eight pounds ten shillings Stg., value receiv- 
ed from 

David Kobb & Co. 

Wm. Gillespie & Co. 
To Messrs. Wm. Gillespie & Comp. 
Linen Printers, Anderston. 

On the 29th October 1791, William Gillespie and Company, in con- 
sequence of a second consignment of goods, accepted another bill for £50 
r«iq7-i sterling, dated 29th July 1791, payable *six months after date. 
L -1 This bill was written, and its amount altered to £450 by Bobb, 
in a similar manner with the former. The fraud, however, was not so 
well executed ; in particular, the word " Four," which in it was inserted 
at the end of ithe second line, had a very crowded appearance. 

This second bill originally stood thus : — 

Glasgow, 29 Juli/, 1791. 
£ 50 Sg. 

Six mo'- after date pay to us or 
order at the shop of Mr. Andrew Sibbald, the sum of 
Fifty pounds Stg. value received in goods of 

David Kobb & Co. 
Messrs. Wm. Gille'spie & Co., Wm. Gillespie & Co. 

Linen-Printers, Anderston. 

The bill as altered presented the following appearance : — 

Glasgow, 29 July, 1791. 
£450 Sg. 

Six mo'- after date pay to us or 
to our order at the shop of Mr. Andrew Sibbald, the sum of Ponr 
Hundred and Fifty pounds Stg. value received in goods of 

David Bobb & Co. 
Messrs. Wm. Gillespie & Co., Wm. Gillespie & Co. 

Linen-Printers, Anderston. 

These bills as thus altered were discounted by William Kobb with 
Archibald Graham, cashier for the Thistle Bank at Glasgow, who having 
threatened to charge Gillespie and Co., they raised a suspension, in which 
they offered to prove that it was the general practice not to write upon 
the stamp. 

Pleaded for the Suspenders.—'Wh&a. a document of debt is altered by 
forgery or vitiation, action will not be sustained on it, even to the extent 
for which it was readily granted ; because after the alteration, it affords 
no legal evidence of its former state ; 4 Term Kep. 1791, Master v. 

r*198T ^^'^^'^' ^°'^°*' *^' P" '^^^' ^'^ '^°^y' 1712, Lawrie v. Reid, voce 
L J Proof. The charger must therefore prove his debt aliunde, and 
bring a regular action for constituting it. 



BILLS OF GXOHAMGE. 143 

At any rate, the acceptor cannot be liable beyond the original sum. 
The obligation of the grantor of a bill, as of any other writing, is founded 
entirely on his own consent. There is only this difference between them ; 
that the former is understood to consent to pay the amount of the bill, 
as at the date of accepting it ; without stating any exceptions which do 
not appear from the bill itself. 

Every time a bill is indorsed, a new transaction takes place between 
the indorser and the indorsee, by which the former binds himself, that 
the amount of the bill, as at the date of the indorsation, shall be paid. 
But to this transaction the acceptor is no party ; and the measure of his 
obligation cannot be affected by it. To entitle the indorsee to operate 
payment from him, it must be established, that he consented to pay it. 
In. general, his subscription is sufficient to fix this obligation against him. 
This, however, will not always hold. The bill may be palpably vitiated 
or erased ; or, as in the present case, words may have beea added to it 
after he had signed it. In such cases, the ingenuity of the fraud, or the 
difficulty of detecting it, cannot vary the question. Indeed, the objection 
to the bill may not be at all perceptible on the face of it ; it may have 
been extorted by force or fear; or granted by a person incapable of con- 
sent. 

After the acceptor returns the bill to the drawer, he has no more con- 
trol over it, but the indorsee may make proper inquiry before advancing 
his money; and if he neglects to do so, as the acceptor and he are in 
pari casu in every other respect, it is he who should suffer for the omis- 
sion. 

Pleaded /or the Chargers. — It is acknowledged that the subscription 
of the acceptor is genuine ; and that the rest of the bill is in the hand- 
writing of the drawer; and there is evidently no erasure made, nor a 
single letter nor word put in place of another. There being therefore no 
forgery, or vitiation, in the present case, the law with respect to forged 
or vitiated writings does not apply. 

*A forged deed is altogether null, because it is not the deed of r^iooT 
the person against whom the forgery is committed ; and a vitiated L J 
deed affords no evidence of its original state, whereas, in the present 
case, there is merely aa addition made to a true bill, and there can be no 
reason why it should not be supported to its original extent. 

But, farther, as the acceptor of a bill agrees to subject himself to the 
consequences of his subscription ; and, as bills, like real rights, cannot 
be affected by exceptions, which do not appear ex facie of them, when a 
bill, liable apparently to no objection, comes into the hands of an onerous 
indorsee, in consequence of its being delivered by the acceptor into the 
bands of the drawer, it will be good against the former, although it may 
have been fraudulently obtained from him, or deposited with the drawer 
in trust. 

In the present case, the fraud has been committed by means of an 
addition made to the bill ; but suppose there had been subjoined to it a 
declaration, that it should not be payable till the death of the acceptor, 
if the part of the paper containing this addition had been torn off, the 
aooeptor would have been obliged immediately to pay its contents to the 



144 KOSS ON OOMMEROIAL LAW. 

indorsee. If the bill had been totally blank when the acceptor adhibited 
his subscription to it, he must have been held to have given the drawer 
a discretionary power in filling it up. The same would have been the 
case if the bill had been complete except as to the sum ; or if a part of 
the sum had been left blank with the intention of enabling the drawer to 
enlarge it at pleasure. Now, since blanks were left in the present case, 
sufficient to allow the fraud to be committed without suspicion, it can 
make no difference, in a question with an onerous indorsee, that it was 
not intended or imagined by the acceptor that any improper use would 
be made of them. No precaution on the part of the indorsee would have 
enabled him to detect the fraud ; while the ac6eptor, by writing on the 
stamp, or drawing lines across it, might have prevented the possibility of 
its execution. It would be extremely dangerous if acceptors and indor- 
sers were not liable for the consequences of blanks carelessly left by 
them. 

r*9nm '^^^ ante-dating of the bill is of itself sufficient to subject *the 
■- J suspenders. By that measure, the chargers were deceived into a 
belief, that Rabb was so little distressed for money that he could afford 
to allow good bills to lie by him for three months, without making use 
of them. Indeed, it was owing to this alone that Robb was enabled to 
commit the fraud. The bills are written upon shilling stamps, and in 
July, 1791, (the date they bear,) bills to any amount might be written 
upon a stamp of that value ; but before October, 1791, (the real date of 
the transaction,) in consequence of an alteration in the stamp laws, a hill 
for a larger sum than ^100, was ineffectual if written on a shilling 
stamp ; so that, if the bills had not been ante-dated, the charger, on that 
account alone, would have refused to discount them. 

Replied for the Suspenders — It can easily be proved that, prior to the 
frauds alleged to have been committed by Robb, it was a general prac- 
tice even among the most cautious people, not to write upon the stamp; 
and no acceptor, however circumspect, would have hesitated at signing a 
bill with such a blank ; or thought of drawing lines across it. The sua- 
penders, therefore, were guilty of no fault; where^ the charger, by 
proper attention, might have discovered the fraud. 

The practice of ante-dating bills is very common, and perfectly harm- 
less. It has been introduced from its being customary to grant bills for 
real transactions, payable in six months after date ; and because bankers 
will not discount them till within three months of the term of payment. 
To them, however, the date of the transaction is of no consequence, pro- 
vided the names on the bill be good, and the term of payment near. The 
ante-dating the bills could not deceive the charger as to Robb's credit; 
because, though they had been granted of their nominal date, they could 
not have been discounted before their real one. 

The alteration in the stamp laws cannot affect the present question, 
because, after it took place, a shilling stamp, continued to be the proper 
one for the sum for which the bills were actually accepted. 

r*20n '^^^ ^°"'' " ^"""^ *^® ^^"^""^ orderly proceeded, so far as 
L -I *concerns the bill for £458, 10s. sterling, charged on; and with 
regard to the other bill charged on, for £450, found the letters orderly 



BILLS OF EXOHANOE. 145 

proceeded to the extent of £50 sterliog, and suspended the charge for 

the remaining ifi400 sterling." 

The charger having reclaimed the Court " Adhered." 

The suspender having also reclaimed against the interlocutor, in so far 

as it found the letters orderly proceeded to the extent of £50, with 

regard to the bill charged on for ^400, the Court suspended the letters 

dmplieiter as to that bill. 



A BILL OE NOTE MAT BE DRAWN OR INDORSED IN PENCIL AS WELL AS 

IN INK. 

GEAEY V. PHYSIC. 

Feb. 6, 1826.— E. 5 B. & C. 234. E. C. L. E. vol. 11. 

Assumpsit by the plaintiff as indorsee against the defendant as maker 
of a promissory note for the sum of £30, payable two months after date 
to the order of one Folder, and indorsed by him. Folder, to one Kemp, 
who subsequently indorsed the note to the plaintiff. At the trial before 
Abbott, C. J., at the London sittings after Hilary Term, 1825, it appeared 
that the indorsement by Kemp to the plaintiff was in pencil, and it was 
thereupon objected that the plaintiff could not recover; an indorse- 
ment in pencil not being such an indorsement as the law and custom 
of merchants recognises to be sufficient to pass the interest in a bill 
of exchange, and promissory notes being by the statute 3 & 4 Anne, c. 9, 
§ 1, assignable or indorsable in the same manner as unpaid bills of ex- 
change are according to the custom of merchants. The Lord Chief Jus- 
tice thought it sufficient, and directed the jury to find a verdict for the 
plaintiff, reserving liberty to the defendant's counsel to move to enter a 
nonsuit, if the Court should be of opinion that the indorsement of the 
promissory note in pencil was not a good and valid indorsement. 

*F. Pollock, in last Easter term, obtained a rule nisi to enter p^inno-i 
a nonsuit. He contended, first, that a writing in pencil was not L J 
a writing recognised at common law ; and he cited Co. Lit. 229, a, where 
Lord Coke, speaking of a deed, says, " Here it is to be understood, that it 
ought to be in parchment or in paper. For if a writing be made upon a 
piece of wood, or upon a piece of linen, or on the bark of a tree, or on a 
stone, or the like, &c., and the same be sealed or delivered, yet is it no 
deed, for a deed must be written, either in parchment, or paper, as before 
is said, for the writing upon these is least subject to alteration or corrup- 
tion." For the same reasons a writing ought to be made with materials 
least subject to alteration or corruption. Now, writing made with a pen- 
cil is easily altered or obliterated, and, therefore, for the reasons given 
by Lord Coke, where the law requires a contract to be in writing, it 
ought to be in writing made with materials the least subject to alteration. 
Secondly, he contended, that it was not a writing according to the custom 
and usage of merchants. In point of practice bills of exchange were 
generally written in ink, and it lay upon the plaintiff in this case to show 



146 ROSS ON OOMMEEOIAL LAW. 

by evidence that this was a writing according to the custom of mer- 
chants. 

Thesiger now showed cause. — The passage cited from Co. Lit. 229, a, 
regards only the materials upon which, not with which, a deed must be 
written ; and even assuming that a deed written in pencil might not be 
good, it does not therefore follow that a bill of exchange so written may 
not be so. Deeds are more solemn instruments, and are intended perma- 
nently to go along with the inheritance, but bills of exchange are made 
to continue in force for a very short period. Letters and words traced 
on paper by a pencil, constitute writing in the ordinary acceptation of 
that term. In Jeffrey v. Walton, 1 Stark. 267, a memorandum entered 
in pencil upon a card was received as evidence of an agreement ; and in 
Kymes v. Clarkson, 1 Phill. 22, Sir John Nicholl was of opinion that a 
will written by a testator with a pencil would be valid, provided that the 
Court could be satisfied that he intended so to execute his will. In Green 
r«on!?n ^' Skipworth, *1 Phill. 53, a disposition made by a testator in 
L J pencil was carried into effect, and in Dickenson v. Dickenson, 2 
Phill. 173, alterations in pencil on a regularly executed will were admit- 
ted to prolsate. Sir John Nicholl said " there was no doubt in point of 
law they must be considered as equally valid as if made in ink, provided 
the deceased intended them to take effect." Now, there can be no ques- 
tion as to the intention here. For here Kemp not only wrote his name 
on the note in pencil, but he passed it from his hand to another, thereby 
clearly showing that he intended to transfer the property in the note. 
The authorities, therefore, show that this indorsement in pencil is an in- 
dorsement in writing within the legal meaning of that term. Secondly, 
it is an indorsement in writing within the usage and custom of merchants. 
That usage requires that the indorsement should be in writing ; it refers 
to the act to be done, and not to the particular mode or the materials 
with which it is to be done. The argument addressed to the Court on 
the part of the defendant goes to confound the usage with the practice. 
If the usage requires not only that the indorsement should be in writing, 
but that it should be written in a particular mode, it will be a matter of 
inquiry whether the colour of the ink, or the species of paper on which 
the bill is written, be such as is required by the custom. 

F. Pollock, contra — The passage from Co. Litt. was cited to show 
that where the law required a contract to be in writing, it required that 
it should be written on materials which were the least subject to altera- 
tion ; and from thence it was inferred that the law, for the same reason, 
would require that it should be written with materials having the same 
quality, general convenience certainly requiring that negotiable instru- 
ments should be written with materials more durable than pencil. It lay 
upon the plaintiff to show that such a writing was a writing within the 
customyof merchants, and that he has not done. Suppose the indorse- 
ment on the paper had been scratched with a pin, or with the inverted 
end of a pencil, would that have been a writing according to the custom 
of merchants? 

Abbott, C. J — There is no authority for saying that where the law 



BILLS OP EXCHANGE. 147 

•requires a contract to be in writing, that writing must be in ink. r*on^-i 
The passage cited from Lord Coke shows that a deed must be L J 
written on paper or parchment, but it does not show that it must be 
written in ink. That being so, I am of opinion that an indorsement on a 
bill of exchange may be by writing in pencil. There is not any great 
danger that our decision will induce individuals to adopt such a mode of 
writing in preference to that in general use. The imperfection of this 
mode of writing, its being so subject to obliteration, and the impossibility 
of proving it when it is obliterated, will prevent its being generally 
adopted. There being no authority to show that a contract which the 
law requires to be in writing should be written in any particular mode, 
or with any specific material, and the law of merchants requiring only 
that an iudorsement of bills of exchange should be in writing, without 
specifying the manner with which the writing is to be made, I am of 
opinion that the indorsement in this case was a sufficient indorsement 
in writing within the meaning of the law of merchants, and that the 
property in the bill passed by it to the plaintiff. 

Bayley, J. — I think that a writing in pencil is a writing within 
the meaning of that term at common law, and that it is a writing 
within the custom of merchants. I cannot see any reason why, when the 
law requires a contract to be in writing, that contract shall be void if it 
be written in pencil. If the character of the handwriting were thereby 
wholly destroyed, so as to be incapable of proof, there might be something 
in the objection ; but it is not thereby destroyed, for, when the writing 
is in pencil, proof of the character of the handwriting may still be given. 
I think, therefore, that this is a valid writing at common law, and ^Iso 
that it is an indorsement according to the usage and custom of merchants; 
for that usage only requires that the indorsement should be in writing, 
and not that writing should be made with any specific materials. 

HoLROYD, J., concurred. 

Bule discharged. 



THE PROPERTY OF A BILL OR NOTE, ALTHOtTGH LOST, STOLEN, OR FRAUD- 
ULENTLY ACQUIRED, WHICH IS PAYABLE TO BEARER, OR PAYABLE TO 
ORDER AND HAS BEEN INDORSED IN BLANK, PASSES WITH THE POS- 
SESSION TO AN ONEROUS BONA FIDE HOLDER, BUT IN ENGLAND IN AN 
ACTION ON SUCH A BILL IT IS INCUMBENT ON THE HOLDER TO SHOW 
THAT HE GAVE VALUE FOR IT. 

*I.— MILLEE V. BACE. [*205] 

Jan. 31, 1758.— B. 1 Burr. 452. 

This was an action of trover against the defendant, upon a bank note, 
for the payment of ^£21, 10s. to one William Finney, or bearer, on de- 
mand. 

The cause came on to be tried before Lord Mansfield, at the sittings 



148 BOSS ON OOMMEEOIAL LAW. 

in Trinity Term last, at Gruildhall, London : and upon the trial it ap- 
peared that William Finney, being possessed of this bank nptg, on the 
11th of December, 1756, sent it by the general post, undercover, direct- 
ed to one Bernard Odenharty, at Chipping Norton in Oxfordshire ; that 
on the same night the mail was robbed, and the bank note in question 
(amongst other notes) taken and carried away by the robber ; that this 
bank note, on the 12th of the same December, came into the hands and 
possession of the plaintiff, for a full and valuable consideration, and in 
the usual course iind way of his business, and without any notice or 
knowledge of this bank note being taken out of the mail. 

It was admitted and agreed that, in the common and known course of 
trade, bank notes are paid by and received of the holder or possessor of 
them as cash ; and that in the usual way of negotiating bank notes, they 
pass from one person to another as cash by delivery only, and without 
any further inquiry or evidence of title than what arises from the posses- 
sion. It a,ppeared that Mr. Finney, having notice of this robbery, on 
the 13th of December applied to the Bank of England "to stop the pay- 
ment of this note:" which was ordered accordingly upon Mr.. Finney's 
entering into proper security " to indemnify the Bank." 

Some little time after this, the plaintiff applied to the Bank for the 
f^nno-i payment of this note; and, for that purpose, delivered *the note 
1- J to the defendant, who is a clerk in the Bank j but the defendant 
refused either to pay the note, or to redeliver it to the plaintiff. Upon 
which this action was brought against the defendant. 

The jury found a verdict for the plaintiff, and the sum of £21, 10s. 
damages; subject nevertheless to the opinion of this Court upon this 
question — " Whether, under thfe circumstances of this case, the plaintiff 
had a sufficient property in this bank note to entitle him to recover in the 
present action ?" 

Mr. Williams was beginning on behalf of the plaintiff; — but Lord 
Mansi'IELD said, "That as the objection came from the side of the de- 
fendant, it was rather more proper for the defendant's counsel to state 
and urge their objection." 

Sir Richard Lhyd for the Defendant. — The present action is brought, 
not for the money due upon the note, but for the note itself, the paper, 
the evidence of the debt. So that the right to the money is not the 
present question : the note is only an evidence of the money's being due 
to him as bearer. 

The note must either come to the plaintiff by assignment, or must be 
considered as if the Bank gave a fresh, separate, and distinct note to each 
bearer. Now, the plaintiff can have no right by the assignment of a 
robber. And the Bank cannot be considered as giving a new note to 
each bearer : though each bearer may be considered as having obtained 
from the Bank a new promise. 

I do not say whether the Bank can or cannot stop payment : that is 
another question. But the note is only an instrument of recovery. 

Now this note, or these goods, (as I may call it,) was the property of 
Mr. Finney, who paid in the money ; he is the real owner. It is like a 
medal which might entitle a man to payment of money, or to any other 



BILLS or EXCHANGE. l49 

advantage. And it is by Mr. Finney's authority and reqliest that Mr. 
Bace detained it. 

It may be objected, "that this note is to be considered as cash in the 
usual course of trade." But still, the course of trade is not at all affected 
by the present question about the right to the note. A different species 
of action must be brought *for the note, from what must be r^anf-i 
brought against the Bank for the money. And this man has <- -^ 
elected to bring trover for the note itself, as owner of the note; and 
not to bring his action against the Bank for the money. In which 
action of trover, property cannot be proved in the plaintiff; for a special 
proprietor can have no right against the true owner. 

The cases that may affect the present are, 1 Salk. 126, M. 10 W. 3 
Anonymous, coram Holt, C. J., at nisi prius at Gruildhall. There Lord 
C. J. Holt held, " That the right owner of a bank-bill, who lost it, might 
have trover against a stranger who found it ; but not against the person 
to whom the finder transferred it for a valuable consideration, by reason 
of the course of trade, which creates a property in the assignee or bearer." 
1 Ld. Baym. 738, 8. C, in which case the note was paid away in the 
course of trade; but this remains in the man's hands, and is not come 
into the course of trade. H. 12 W. 3, B. B., 1 Salk. 283, 284, Ford v. 
Hopkins, per Holt, C. J., at nisi prius at Guildhall. " If bank notes, 
exchequer notes, or million lottery tickets, or the like, are stolen or lost, 
the owner has such an interest or property in them, as to bring an action, 
into whatsoever hands they are come. Money or cash is not to be dis- 
tinguished, but these notes or bills are distinguishable, and cannot be 
reckoned as cash ; and they have distinct marks and numbers on them." 
Therefore the true owner may seize these notes wherever he finds them, 
if not passed away in the course of trade. 

1 Strange 606. H. 8 Gr. 1. In Middlesex, coram Pratt, C. J., Arm- 
ory V. Delamirie, a chimney-sweeper's boy found a jewel. It was ruled, 
"That the finder has such a property as will enable him to keep it against 
all but the rightful owner, and, consequently may maintain trover." 

This note is just like any other piece of property until passed away in 
the course of trade. And here the defendant acted as agent to the true 
owner. 

Mr. WilMams, contra, for the Plaintiff. — The holder of this bank note 

upon a valuable consideration, has a right to it, even against the true owner. 

First, The circulation of these notes vests a; property in the r^ono-i 

*holder, who comes to the possession of it upon a valuable con- L -I 

sideration. 

Second, This is of vast consequence to trade and commerce , and they 
would be greatly incommoded if it were otherwise. 

Thirdly, This falls within the reason of a sale in market-overt ; and 
ought to be determined upon the same principle. 

First, He puts several oases, where the usage, course, and convenience 
of trade, made the law, and sometimes even against an Act of Parliament. 
3 Keb. 444, Stanley v. Ayles, per Hale, C. J., at G-uildhall. 2 Strange, 
1000, Lumley v. Palmer, where a parol acceptance of a bill of exchange 
was holdeu sufficient against the acceptor. 1 Salk. 23. 



150 ROSS ON COMMERCIAL LAW. 

Secondly, This paper credit has been always, and with great reason, 
favoured and encouraged. 2 Strange, 946, Jenys v. Fowler et al'. 

The usage of these notes is, "that they pass by delivery only, and are 
considered as current cash ; and the possession always carries with it the 
property." 1 Salk. 126, pi. 5, is in point. 

A particular mischief is rather to be permitted than a general incon- 
venience incurred. And Mr. Finney, who was robbed of this note, was 
guilty of some laches in not preventing it. 

Upon Sir Kichard Lloyd's argument, a holder of a note might suffer 
the loss of it for want of title against a true owner ; even if there was a 
chasm in the transfer of it through one only out of 500 hands. 

Thirdly, This is to be considered upon the same foot as a sale in mar- 
ket-overt. 

2 Inst. 713. "A sale in market-overt binds those that had right." 

But it is objected by Sir Richard, " that there is a substantial differ- 
ence between a right to the note, and a right to the money." But I say 
the right to the money will attract to it a right to the paper. Our right 
is not by assignment, but by law, by theusage and custom of trade. I 
do not contend, that the robber, or even the finder of a note, has a right 
to the note : but, after circulation, the holder upon a valuable considera- 
tion has a right. < 

r*9ftQn ^® ^^^^ ^ property in this note ; and have recovered the *value 
L J against the withholder of it. It is not material what action we 
could have brought against the Bank. 

Then he answered Sir Richard Lloyd's ease, and agreed, that the true 
owner might pursue his property where it came into the hands of another 
without a valuable consideration, or not in the course of trade : which is 
all that Lord C. J. Holt said in 1 Salk. 284. 

As to 1 Strange, 505, he agreed that the finder has the property against 
all but the rightful owner, not against him. 

Sir Richard Lloyd in reply I agree that the holder of the note has 

a special property : but it does not follow that he can maintain trover for 
it against the true owner. 

This is not only without, but against the consent of the owner. 
Supposing this note to be a sort of mercantile cash, yet it has an ear- 
mark by which it may be distinguished, therefore trover will lie for it. 
And so in the case of Ford v. Hopkins. 

And you may recover a thing stolen from a merchant, as well as a 
thing stolen from another man. And this note is a mere piece of paper; 
it may be as well stopped as any other sort of mercantile cash, as, for 
instance, a policy which has been stolen. And this has not been passed 
away in trade, but remains in the hands of the true owner. And 
therefore it does not signify in what manner things are passed away, when 
they are passed away ; for this was not passed away. Here the true 
owner or his servant, which is the same thing, detains it. And surely 
robbery does not divest the property. 

This is not like goods sold in mairket-overt ; nor does it pass in the 
way of a market-overt, nor is within the reason of a market- overt. Sup- 
pose it was a watch Stolen, the owner may seize it, (though he finds it in 



BltLS OP EXCHANGE. 151 

a market-overt,) before it is sold there. But there is no market-overt 
for bank-notes. 

I deny the holder's (merely as holder) having a right to the note 
against the true owner ; and I deny that the possession gives a right to 
the note. 

Upon this arrangement on Friday last Lord Mansfield then said that 
Sir Richard Lloyd had argued it so ingeniously that, though he had no 
doubt about the matter, it might be proper to look *into the cases y^n-t n-i 
he had cited, in order to give a proper answer to them ; and L J 
therefore the Court deferred giving their opinion to this day. But at the 
same time Lord Mansfield said he would not wish to have it understood 
in the city that the Court had any doubt about the point. 

Lord Mansfield now delivered the resolution of the Court. 

After stating the case at large, he declared, that at the trial he had 
no sort of doubt but that this action was well brought, and would lie 
against the defendant in the present case, upon the general course of 
business, and from the consequences to trade and commerce, which would 
be much incommoded by a contrary determination. 

It has been very ingeniously argued by Sir Richard Lloyd for the de- 
fendant. But the whole fallacy of the argument turns upon comparing 
bank-notes to what they do not resemble, and what they ought not to be 
compared to, viz., to goods, or to securities, or documents for debts. 

Now, they are not goods, nor securities, nor documents for debts, nor 
are so esteemed ; but are treated as money, as cash, in the ordinary 
course and transaction of business, by the general consent of mankind, 
which gives them the credit and currency of money to all intents and 
purposes. They are as much money as guineas themselves are, or any 
other current coin that is used in common payments, as money or cash. 

They pass by a will, which bequeaths all the testator's money or cash, 
and are never considered as securities for money, but as money itself. 
Upon Lord Ailesbury's will j6900 in bank-notes was considered as cash. 
On payment of them, whenever a receipt is required, the receipts are 
always given as for money, not as for securities or notes. 

So, on bankruptcies, they cannot be followed as identical and distin- 
guishable for money, but are always considered as money or cash. 

'Tis pity that reporters sometimes catch at quaint expressions that may 
happen to be dropped at the Bar or Bench, and mistake their meaning. 
It has been quaintly said, " That the reason why money cannot be follow- 
ed is, because it has no ear-mark ;" but this is not true. The true rea- 
son is, upon *account of the currency of it, it cannot be recov- r^oi-i-i 
ered after it has passed in currency. So in case of money stolen, L J 
the true owner cannot recover it after it has been paid away fairly and 
honestly upon a valuable and bona fide consideration ; but before money 
has passed in currency, an action may be brought for the money itself. 
There was a case in 1 Geo. I., at the sittings, Thomas v. Whip, before Lord 
Macclesfield, which was an action upon assumpsit, by an administrator 
against the defendant, for money had and received to his use. The de- 
fendant was nurse to the intestate daring his sickness, and being alone, 



152 ROSS ON OOMMEKOIAL LAW. 

conveyed the money. And Lord Macclesfield held that the action lay. 
Now this must he esteemed a finding at least. 

Apply this to the case of a bank-note. An action may lie against the 
finder it is true, (and it is not at all denied,) but not after it has been 
paid away in currency. And this point has been determined even in the 
infancy of bank-notes ; for 1 Salk. 126, M. 10 W. 3, at Nisi Prius, is 
in point. And Lord C. J. Holt there says, that it is "by reason of the 
course of trade, which creates a property in the assignee or bearer." 
(And " the bearer" is a more proper expression than assignee.) 

Here an inn-keeper took it, bona fide, in his business from a person 
who made the appearance of a gentleman. Here is no pretence or sus- 
picion of collusion with the robber ; for this matter was strictly inquired 
and examined into at the trial, and is so stated in the case, " that he took 
it for a full and valuable consideration, in the usual course of business." 
Indeed, if there had been any collusion, or any circumstances of unfair 
dealings, the case had been much otherwise. If it had been a note for 
^1000, it might have been suspicious : but this was a small note for £21, 
10s. only, and money 'given in exchange for it. 

Another case cited was a loose note, in 1 Ld. Raym. 738, ruled by 
Lord C. J. Holt at Guildhall in 1698, which proves nothing for the de- 
fendant's side of the question ; but it is exactly agreeable to what is laid 
down by my Lord C. J. Holt, in the case I have just mentioned. The 
action did not lie against the assignee of the bank-bill, because he had it 
for valuable consideration. 

r«9191 *In that case he had it from the person who found it; but 
^ J the action did not lie against him, because he took it in the 
course of currency, and therefore it could not be followed in his hands. 
It never shall be followed into the hands of a person who bonS. fide took 
it in the course of currency,, and in the way of his business. 

The case of Ford v. Hopkins was also cited, which was in Hil. 12 W. 
3, coram Holt, C. J., at Nisi Prius at Guildhall, and was an action of 
trover for million-lottery tickets. But this must be a very incorrect re- 
port of that case : it is impossible that it can be a true representation of 
what Lord C. J. Holt said. It represents him as speaking of bank-notes, 
exchequer-notes, and million-lottery tickets, as like to each other. Now 
no two things can be more unlike to each other than a lottery ticket and 
a bank-note. Lottery tickets are identical and specific : specific actions 
lie for them. They may prove extremely unequal in value ; one may be 
a prize, another a blank. Land is not more specific than lottery tickets 
are. It is there said, " That the delivery of the plaintifi"s tickets to the 
defendant, as that case was, was no change of property." And most clearly 
it was no change of the property ; so far the case is right. But it is 
here urged as a proof, "that the true owner may follow a stolen bank- 
note into what hands soever it shall come." 

Now the whole of that case turns upon the throwing in bank-notes as 
feeing like to lottery tickets. 

But Lord C. J. Holt could never say " that an action would lie against 
the person who, for a valuable consideration, had received a bank-note 
which had been stolen or lost, and bona fide paid to him," even though 



BILLS or EXCHANGE. 153 

tbe action was brought by the true owner ; because he had determined 
' otherwise but two years before, and because bank-notes are not like lot- 
tery tickets, but money. 

The person who took down this case certainly misunderstood Lord C. 
J. Holt, or mistook his reasons. For this reasoning would prove, (if it 
was true, as the reporter represents it,) that if a man paid to a goldsmith 
£500 in bank-notes, the goldsmith could never pay them away. 

A bank-note is constantly and universally, both at home and r«9iq-| 
*abr6ad, treated as money, as cash, and paid and received as cash : "- J 
and it is necessary, for the purposes of commerce, that their currency 
should be established and secured. 

There was a case in the Court of Chancery, on some of Mr. Child's 
notes, payable to the person to whom they were given, or bearer. The 
notes had been lost or destroyed many years. Mr. Child was ready to 
pay them to the widow and administratrix of the person to whom they 
were made payable, upon her giving bond, with two responsible sureties, 
(as is the custom in such cases,) to indemnify him against the bearer, if 
the notes should ever be demanded. The administratrix brought a bill, 
which was dismissed, because she either could not or would not give the 
security required. No dispute ought to be made with the bearer of a 
cash-note in regard to commerce, and for the sake of the credit of these 
notes ; though it may be both reasonable and customary to stay the pay- 
ment till inquiry can be made, whether the bearer of the note came by 
it fairly or not. 

Lord Mansfield declared that the Court were all of the same opinion 
for the plaintiff, and that Mr. Justice Wilmot concurred. 

Eule. — That the postea be delivered to the plaintiff. 



II.— PEACOCK V. KHODES. 

May 8, ITSI.— E. 2 Doug. 633. 

In an action upon an inland bill of exchange, which was tried before 
WiLLES, Justice, at the last Spring Assizes for Yorkshire, a verdict, by 
consent, was found for the plaintiff, subject to the opinion of the Court 
on a special case, stating the following facts : — 

The bill was drawn at Halifax on the 9th of August, 1780, by the 
defendants, upon Smith, Payne & Smith, payable to William Ingham, or 
order, thirty-one days after date, for value received. It was indorsed by 
William Ingham, and was "presented by the plaintiff for accept- r^^n-iA-i 
ance and payment ; but both were refused, of which due notice L J 
was given by the plaintiff to the defendants, and the money demanded of 
the defendants. The plaintiff, who was a mercer at Scarborough, received 
the bill from a man not known, who called himself William Brown, and 
by that name indorsed the bill to the plaintiff, of whom he bought cloth, 
and other articles in the way of the plaintiff's trade as a mercer, in his 
shop at Scarborough, and paid him that bill, the value whereof the plain- 
tiff gave to the buyer in cloth and other articles, and cash, and small 



154 BOSS ON OOMMEBOIAL LAW. 

bills. The plaintiff did not know the defendants, but had before, in his 
shop, received bills drawn by them, which were duly paid. William 
Ingham, to whom the bill was payable, indorsed itj John Dal try received 
it from him, and indorsed it; Joseph Fisher received it from John Dal- 
tryj and it was stolen from Joseph Fisher, at York, (without any in- 
dorsement or transfer thereof by him,) along with other bills in his 
pocket-book, whereof his pocket was picked, before the plaintiff took it 
in payment as aforesaid. The plaintiff declared as indorsee of Ingham." 
Wood, for the plaintiff, argued, that the bill was taken by Peacoct in 
the ordinary course of business, and there was no pretence that he had 
notice that it had been obtained unfairly. If he had, he admitted that 
he could not recover. A bill indorsed by the payee is to be considered 
to all intents as cash, unless he chooses to restrain its currency, which 
he may do by a special indorsement, as, " Pay the contents to William 
Fisher." The very object in view in making negotiable securities, is, 
that they may serve the purposes of cash. The case of Miller v. Kace, 
1 Burr. 452, although the question there arose upon a bank-note, esta- 
blishes the principle just stated. If this bill hadi not been stolen, but 
lost, the owner might have maintained trover against the finder, but still 
the bona, fide holder would have been entitled to recover upon it. This 
was determined with respect to a note upon a banker payable to A. or 
bearer, in the case of Grant v. Vaughan. Here the bill was indorsed 
blank, but that was the same thing in effect as if it had been made pay- 
r=i=9i f^i *^^® '° *'''® bearer. A blank indorsement is an indorsement to 
L J all the world, to any body who shall happen to be the bearer. 
There was a case of Francis v. Mott, directly in point to the present, 
tried before Lord Mansfield, two or three years ago. There, a bill, with 
blank indorsements, had been picked out of the holder's pocket, at Man- 
chester races. Being offered in payment to a house at Manchester, who 
did not know the persons whose names appeared upon it, they sent to 
inquire about their credit, and finding them responsible, gave a valuable 
consideration for it, and sent it to their correspondent at London. He 
carried it to the drawee for acceptance, who detained it, and said it 
was stolen ; upon which the house at Manchester brought an action 
against the drawer. The Attorney-general was for the defendant, and 
Mr. Dunning for the plaintiff. The Attorney-general attempted to show 
that the defendants knew the bill had been unfairly obtained, and, hav- 
ing failed in that proof, he gave up the cause, and the plaintiff recovered. 
The argument on the part of the present defendants would extend to all 
cases of fraud and imposition, as well as theft, and would stop the cur- 
rency of bills of exchange, because it would render it necessary for every 
indorsee to insist upon proof of all the circumstances, and the manner 
in which the bill came to the indorser. As the negligence, in this case, 
was on the part of the person who lost the bill, the loss ought to fall 
upon him, not upon the plaintiff. 

Fearnly, for the defendants.— The cases on this subject are all modern, 
but all of them establish a distinction between bank-notes, or banker's 
cash notes payable to bearer, and indorsable bills or notes. The two 
first sorts only are considered as cash. No case that I have found is 



BILLS Oir EXOHANaE. 155 

exactly in point to that before the Court. In Price v. Neale, 3 Burr., 
which was the case of a forged bill that had been accepted, and paid to 
the defendant in the course of trade, your lordship held, that the acceptor, 
having given credit to it by his acceptance, should not recover back what 
he had paid to a bona fide holder; but in the present case, there was no 
acceptance. Walmsley v. Child, 1 Ves. 341, before Lord Hardwicke, 
was upon cash notes payable to bearer. Lord *Holt makes the rjico-ifl-i 
distinction between bills and cash notes, in Tassell & Lee v. L -' 
Lewis, Ld. Raym. 743. So, in Hodges v. Steward, bills payable to 
bearer, and bills payable to order, are distinguished, 1 Salk. 125. Every 
indorsement of a bill of exchange is considered as a new bill. This was 
laid down by your lordship in Heylin v. Adamson, 2 Burr. 669, 674; 
and, in Miller v. Bace, a bill is considered as being only a security or 
document for a debt. The case of the Executors of Devallar v. Herring, 
9 Mod. 44, 47, seems exactly in point for the defendants. It is there 
laid down, that, if the indorsee of a promissory note lose it, and the 
finder pay it away in the course of trade, the indorsee may maintain 
trover against the person to whom it has been so paid. The arguments 
from inconvenience are in favour of the defendants. No man is obliged 
to take a bill of exchange in payment. A trader should not, in pru- 
dence, take a bill, unless he know the person from whom he receives it. 
But if the law were as contended for on the part of the plaintiff, the 
temptations to theft would be increased. 

Lord MANsriELD told Wood he need not reply, and delivered the opi- 
nion of the Court as follows : — 

Lord Mansfield. — I am glad this question was saved, not for any 
difficulty there is in the case, but because it is important that general 
commercial points should be publicly decided. The holder of a bill of 
exchange, or promissory note, is not to be considered in the light of an 
assignee of the payee. An assignee must take the thing assigned, sub- 
ject to all the equity to which the original party was subject. If this rule 
applied to bills and promissory notes, it would stop their currency. The 
law is settled, that a holder, coming fairly by a bill or note, has nothing 
to do with the transaction between the original parties ; unless, perhaps, 
in the single case, (which is a hard one, but has been determined,) of a 
note for money won at play. I see no difference between a note indorsed 
blank, and one payable to bearer. They both go by delivery, and pos- 
session proves property in both cases. The question of mala fides was 
for the consideration of the jury. The circumstances that the buyer 
and also the drawers were *strangers to the plaintiff, and that he i-^o-iw-i 
took the bill for goods on which he had a profit, were grounds of L J 
suspicion very fit for their consideration. But they have considered 
them, and have found it was received in the course of trade, and there- 
fore the case is clear, and within the principle of all those Mr. Wood 
has cited, from that of Miller v. Eace, downwards, to that determined 
by me at Nisi Prius. 

The postea to be delivered to the plaintiff. 



156 EOSS ON COMMERCIAL LAW. 



III. — SOLOMONS V. THE BANK OP ENGLAND. 

Michaelmas Term, 1791. — E. 13 Bast, 135. 

Trover for a bank note of £500. At the trial before Lord Kenton, 
C. J., at Gruildhall, it appeared that the note in question had been fraud- 
ulently obtained by some persons, by means of a forged draft, from 
Batson and Company, Who acquainted the Bank therewith ; and there- 
fore when it was presented for payment at the Bank some time afterwards 
by the plaintiff, it was stopped, and the plaintiff was informed by the 
Bank of all the circumstances, and required to give an account how he: 
came by it. This was on the 2d February, 1790. It appeared that he 
had received the note from Hymen and Hendricks, his correspondents, 
Jews living at Middleburgh, in a letter, (which was read,) dated 27th of 
January, 1790, wherein they informed him that they should draw upon 
him for the amount at some future period. The plaintiff, on presenting 
the note at the Bank, had inquired whether it were a good one, it being 
of three years' standing. In consequence of what then passed, he, by 
the desire of the bank, wrote to his correspondents at Middleburgh to 
learn how they came by the note : the only answer, however, which was 
communicated to the Bank, was in a letter from those correspondents to 
the plaintiff, that they had received it from a man dressed in such a way, 
in payment for goods, and that they knew nothing of him. Another 
letter was read on the part of the plaintiff from the same persons, dated 
r*21 ST ^^^^ °^ April following, telling the plaintiff that they *would not 
L J be amused by him any longer ; that they should either draw 
upon him for the amount of the note, or expected that he would imme- 
diately return it to them, in case the Bank would not pay it. The note 
was stated to have been received by the plaintiff in reduction of a balance 
due upon his correspondents' account. It further appeared in evidence 
that bank notes of so large an amount as this were not usually current 
at Middleburgh. 

Lord Kenyon, C. J., before whom this case was tried at Gruildhall, 
stated to the jury, that inasmuch as it did not appear that the plaintii 
himself had paid a valuable consideration for the note before notice, he 
should consider him as the agent of Hymen and Hendricks ; and with 
respect to them, he was by no means satisfied in his own mind that they 
had properly accounted for their possession of it : whereupon the plain- 
tiff's counsel desired to be nonsuited, which was done. 

Bancroft obtained a rule to show cause why that nonsuit should not 
be set aside, on the ground that the holder of a bank note was entitled 
to the payment of it on the mere production thereof, it being equivalent 
to money ; and that no suspicion or fraud whatever would warrant a 
withholding of it, unless the fraud were brought home to the holder 
himself. That in this case there was no evidence whatever to impute 
fraud to the plaintiff, and that the proof of it lay affirmatively on the 
defendants, and not negatively on the holder of the note. 

Erskine and Piggott showed cause — They admitted from Miller^ v. 



BILLS OP EXCHANGE. 157 

Race, 1 Burr. 452 ; Grant v. Vaughan, 3 Burr.~1516 ; Peacock v. Rhodes, 
Dougl. 633, and other cases, that prima facie the bearer of a bank note 
was entitled to receive the money merely on the score of his possession, 
and that no other person was entitled to the note, unless he were also 
entitled to the money ; and that whoever impeached his title must take 
the burden of proof upon himself. But the principle of all the cases 
was, that the party standing upon his possession was a bona fide holder 
for a valuable consideration; and therefore *the cases did not 
apply to establish this plaintiff's right, who appeared upon the ■- J 
evidence not to be a holder for a valuable consideration before notice. 
It appears plainly from the letters, that on the 2d February, 1790, when 
he was informed by the bank of all the facts relative to the note, he had 
not then advanced any consideration for it to his correspondents, from 
whom he only received it on the 27th of January preceding, and who 
then informed him that they should draw upon him for the amount at 
some future period. It is as plain that on the 11th of April he had not 
advanced anything on the note ; for they wrote to desire him either to 
pay the money or return the note. If after notice he thought proper to 
pay the money, the most he can claim is to stand in the shoes of Hymen 
and Hendricks, from whom he received it. Now as to them, sufficient 
evidence was given to call on them to show more especially how they 
came by it. If the plaintiff, in order to avert the verdict which he saw 
hanging over his head, thought proper to be nonsuited, there is no ground 
for this Court to interfere; there being evidence enough to warrant the 
suspicion intimated by the learned Judge. 

Bearcro/t, in support of the rule, contended, that upon settled prin- 
ciples of law, and on the broad ground of policy, the plaintiff was entitled 
to recover ; and that there was no evidence here to warrant the intima- 
tion of opinion given by his lordship to the jury, to avert the conse- 
quences of which the plaintiff had, in deference to that opinion, sub- 
mitted to a nonsuit. In one point of view the case was of great moment 
as it affected public policy, which was deeply interested in sustaining 
the credit of the bank abroad as well as here, which could only be done 
by giving the same currency to bank notes as to the cash itself which 
they represented, and for which they were always taken by the public. 
But if once the bank were permitted to withhold payment upon the same 
grounds as would warrant it in the case of bills of exchange, the confi- 
dence of foreigners would be greatly shaken, and the circulation of these 
notes very much diminished. But in point of law, also, it appears from 
the cases alluded to on the other side, that the bare possession of a bank 
note is sufficient to entitle the possessor *to payment, unless it r-i^nnn-, 
appear by positive evidence that he himself came by it fraudu- <- J 
lently. Any fraud committed by any othier person previously, in obtain- 
ing the note, is not sufficient, unless it be also shown that the possessor 
was privy to it. The burden of proof in all such cases rests upon those 
who object to the payment of it. Now here it was even proved on the 
part of the plaintiff, which was not necessary for him to do, that he had 
bona fide received this note from his correspondents at Middleburgh, 
upon account, and in reduction of his balance. His title, therefore, was 

APRm, 1854.— 11 



158 KOSS ON COMMERCIAL LAW. 

at all events unimpeaohed, whatever theirs might be. But even suppos- 
ing the plaintiff's title rested ultimately upon theirs, it was not sufficient 
for the bank to call upon them to show how they came by the note. 
They were not bound to disclose anything. They had a right to receive 
payment till the bank had given evidence of their being concerned in 
the fraud by which the note was originally obtained ; and no such evi- 
dence was given. At all events that would not affect the plaintiff, who, 
so far from there being any evidence of his colluding with Hendricks 
and Co., appears from the letters to have been suspected by them of an 
intention to cheat them by not returning either the money or the note. 

Lord Kenton, C. J. — It is very certain that both policy and conve- 
nience require that bank notes should have the freest currency, and no 
other impediment ought to be put in the way of it than such as mere 
justice requires. This is doing no more than would be the case even 
upon payment of money itself. For if this party had received money 
contrary to conscience, it might have been recovered back again. As 
this case is now situated, I am glad that the opinion which I now hold 
will not prevent the party from making another appeal to the laws of the 
country, if he find that he can better his case. There is no doubt but 
the holder of a bank note is entitled primi, facie to prompt payment ; but 
if another party has been plundered of it before, and has applied to the 
bank, can any impropriety be imputed to them for suspending the pay- 
ment till it is ascertained that the party tendering it for payment is not 
contaminated with the guilt ? Upon this evidence I think -Solomons 
r*221 1 '^"^' ^® considered to be in the same situation as *Hendricks and 
L J Co. Now when they are informed of the circumstances, and 
applied to in order to give information from whom they received the 
note, they refused to give any satisfactory account of it. Under such 
circumstances it is impossible to say that there was not some suspicion 
thrown upon them of their being privy to the fraud ; and that was all 
that I told the jury, to whom I was about to leave the question of fact 
for their decision, when the plaintiff, on such intimation of my opinion, 
desire^ to be nonsuited. 

AsHHURST, J.— This is an application to our discretion. My lord 
says he left the question of fraud to the juryj and what objection is 
there in point of law to it ? On the evidence of suspicion which was. 
^iven with respect to this note, the plaintiff ought to have given every 
possible account how his correspondents came by it, in order to clear 
them from the imputation of fraud, and this was not done : the suspi- 
cion, therefore, remains as it did before. 

BuLLER, J.— The plaintiff must be considered merely as the agent of 
Hymen and Hendricks, and must stand or fall by their title. It is cer- 
tainly enough in the case of a bank-note to show possession, until the 
title is affected by evidence on the other side. Then see whether there 
was not evidence of that sort here, and whether it has been answered. It 
IS proved by the defendants that the bill had originally been improperly 
obtained ; that these parties had notice given them of it, and were ap- 
plied to in order to learn how they came by itj that notes of this large 
amount are not usually current in the country where they reside, and 



BILLS OF EXCHAKOB. 159 

therefore more easy to be remembered from whom received ; and yet 
they have not thought proper to give any account of it. This was cer- 
tainly evidence enough to be left to the jury, which was oiEfered to be 
done, whether these parties were not involved in the fraud. 

G-BOSE, J. — I agree entirely with the plaintiff's counsel that bank- 
notes are to be considered as cash ; and that the holder has a right, in 
the first instance, to say that he will not tell how he came by it : but on 
the other hand, the bank may take upon *them the onus of fixing r^ooon 
fraud upon the holder, and then it will be incumbent on him to I- J 
clear himself from it. Now there were circumstances proved here to 
raise a reasonable presumption of fraud in these parties ; and the plain- 
tiff's counsel were so aware of this, and that the jury would probably 
decide against them, that they rather chose to be nonsuited. There is 
no ground, therefore, for the Court to interfere; especially as the party 
may, if he think proper, bring another action. 

Bule discharged. 



IV. — COLLINS V. MARTIN. 

Feb. 13, 1191. — 'E. 1 B. & P. 648. 

This was an action of trover for two bills of exchange deposited with 
the defendants under the following circumstances. The bills were sent 
by the plaintiff to Messrs. Nightingales, his bankers, indorsed in blank, 
in order to be received by them when due, and to be carried to his ac- 
count. In the bankers' books they were entered short, and the balance 
of account between the bankers and the plaintiff was in favour of the 
latter. The Nightingales being in want of money, deposited the bills in 
question, among others, with the defendants, who were also bankers ; 
and gave them an acknowledgment in writing for a sum of money re- 
ceived upon this deposit. The Nightingales having failed, this action 
was brought to recover the bills. Eyee, C. J., before whom the cause 
was tried at the Guildhall Sittiligs after Michaelmas Term, 1796, finding 
upon inquiry that there was no evidence to show that the defendants 
knew the circumstances under which the bills came into the hands of the 
Nightingales, or the situation of the account between them and the plain- 
tiff, directed a nonsuit. To set aside this nonsuit, a rule nisi having 
been obtained upon a former day; 

Le Blanc and Palmer, Serjts., in the course of the Term showed 
cause. This case may be decided without breaking in upon the doctrine 
of pledges, or denying that bankers are in *some respects fao- rjjcooqi 
tors. The fallacy upon which the motion to set aside the non- L J 
suits proceeds is that bankers are to be taken absolutely as factors in 
every case. To that extent, however, the cases have not gone; though, 
where a question has arisen between the assignees of a banker who has 
failed and his customer, the Courts have compared the banker to a fac- 
tor ; as in Zinck v. Walker, 2 Bl. 11 54. The analogy does not hold be- 
tween bills and goods, for the possession of goods does not vest the pro- 
perty, since the transferree's title can never be better than the transferrer's. 



160 EOSS ON OOMMEKCIAL LAW. 

Bat with respect to bills the whole property in them passes by indorse- 
ment ; and it is immaterial to the person who takes a bill with a blank 
indorsement, whether the title of him from whom he takes it be good or 
not. This distinction has been acknowledged even in oases where the 
title to a bill has been derived to the holder from persons who obtained 
it by finding or theft. Grant v. Vaughan, 3 Burr. 1516, and Miller v. 
Race, 1 Burr. 452. It makes no difference whether the conveyance of 
these bills was absolute, or whether it was only sub modo as to the time 
or conditions under which they were to be held. The plaintiff having 
parted with the whole property in the bills, and put them into the hands 
of the Nightingales like a marked guinea or a bank-note, the only ques- 
tion is, Whether the defendants, when they received them from the 
Nightingales, paid a valuable consideration for them ? That indeed is 
not denied; but the exception taken is to the mode of transfer. In fact, 
the defendant discounted the bills for a part of the time which they had 
to run, the Nightingales reserving to themselves the power of redemption. 
In the case of Goldsmyd and Another v. Gaden and Another, in Chanc. 
13th June, 1796, the plaintiffs, who were brokers, advanced money on 
three navy bills and a deposit of scrip ; and though it afterwards appeared 
that both navy bills and scrip were left by the defendants in the hands 
of the party depositing, for a particular purpose, and were not his pro- 
perty,-but the property of the defendants, yet on a bill filed in equity, it 
was referred to the Master to take an account of what was due to the 
plaintiffs, and an issue at law was refused by the Chancellor, who thought 
the question too clear to be disputed. Now as navy bills pass by an in- 
r«99<n ^oi^sement in *blank, and are not fiUed up till the holder comes 
L -I for the money, they may be compared to bills of exchange indorsed 
in blank to the payee. The only question which has ever arisen in cases 
of this kind has been, Whether the holder came honestly by the bills ? 
As in Hinton's Case, 2 Shower 235, and Crawley v. Crowther, 2 Freem. 
257, both cited by Lord Mansfield in Grant v. Vaughan, 3 Burr. 1524, 
and Peacock v. Rhodes, Doug. 633. 

Shepherd and Saywood, Serjts., in support of the rule. — It may be 
admitted that there is a distinction between goods and bills, though not 
to the extent contended for. Generally speaking, the property in goods 
sold does not pass by the sale, where the vendor is not entitled to sell ; 
but if they be sold in market-overt it does, because the sale is in the 
ordinary course of trade. So the property in these bills did not pasS to 
.the defendants, because they were not negotiated in the ordinary course, 
■and therefore they are subject to the same restriction as goods. It is 
true that the Nightingales themselves gained such a property in these 
bills as would have enabled them by transfer to convey the absolute pro- 
perty to a third person : but they were not entitled to deposit them with 
a third person by way of pledge. If the factor, who has a lien upon 
goods or bills of his principal, cannot transfer that lien to another, Dau- 
bigny v. Duval, 5 Term Rep. 604, much less can he who has no lien, as 
in this case, create a lien in his transferree. The use which was made of 
these bills was clearly a fraud in the Nightingales, to whom they were 
remitted for safe custody, and were by them entered short in their books. 



BILLS or EXCHANGE. 161 

An attempt has been made to liken bills of exchange to navy bills ; but 
in Maclish v. Ekins, Sayer, 73, it was held that a navy bill would not 
pass without an assignment. The negotiability of any instrument de- 
pends on the nature of the instrument. Now, it is the nature of a navy 
bill to be passed without any indorsement, and therefore it is the usual 
course to pledge them. In Eord v. Hopkins, 1 Salk. 283, where lottery 
tickets had been lodged with a banker that he might receive the money 
due on them, it was held that he could not exchange them. A bill in- 
dorsed in blank to a banker, is so indorsed, either to enable *him ^ 
to receive the amount, or to assign it absolutely : third persons L J 
know that a banker has these two powers, but they also know that he 
has not the power to pledge. If, therefore, they take a bill from a banker 
indorsed in blank as a pledge, they take it at their peril, for the indose- 
ment is not even prima facie evidence of a right to the pledge. 

Cur. adv. vult. 

The opinion of the Court was this day delivered by 

Eyke, C. J. — We are all of opinion that this plaintiff was properly 
nonsuited, and that there ought to be no new trial. I have little to add 
to what I stated to be the ground of this nonsuit when I made my report. 
The counsel for the plaintiff admitted that the bankers might have sold 
these bills, but it was argued that they could not pledge them ; and the 
case of a factor pledging the property of his principal was urged as an 
authority ; for it was said that bankers have been considered as factors. 
In questions between bankers, or those representing them, and their cus- 
tomers, they have been considered to some purposes as factors or in the 
nature of factors ; upon the same principle as in other cases, between 
holders of bills of exchange and acceptors, or the first indorser of bills 
payable to a man's own order, the truth of the transactions between 
them has been allowed to be entered into to destroy the primS. facie con- 
sideration of a bill, the supposed value received. But no evidence of 
want of consideration, or other ground to impeach the apparent value 
received, was ever admitted in a case between such an acceptor or drawer, 
and a third person holding the bill for value. And the rule is so strict, 
that it will be presumed that he does hold for value until the contrary 
appears. The onus prdbandi lies on the defendant. If it can be proved 
that the holder gave no value for the bill, then indeed he is in privity 
with the first holder, and will be affected by everything that would affect 
that first holder. This all proceeds upon an argumentum ad hominem ; 
it is saying, you have the title, but you shall not be heard in a court of 
justice to enforce it against good faith and conscience. In strict law, 
and with respect to third persons, bankers do not at all resemble factors; 
nor will "the rule that factors cannot pledge apply to the case of r,oo«T 
a banker pledging indorsed bills. That rule is grounded on the L J 
strict rule of property ; the goods are not the factor's, and therefore he 
cannot pledge them. He may sell them, because, though they are not 
his, he is intrusted to sell them for his principal. He manages the sale, 
but it is his principal who through him sells them. For the purpose of 
rendering bills of exchange negotiable, the right of property in them 
passes with the bills. Every holder with the bills takes the property, 



162 ROSS ON OOMMERCIAL I, A W. 

and his title is stamped upon the hills themselves. The property and the 
possession are inseparable. This was necessary to make them negotiable, 
and in this respect they differ essentially from goods of which the pro- 
perty and possessioil may be in different persons. The property passing 
with the possession, it is admitted that a banker who receives indorsed 
bills from his customers to be got when due, and carried to his account, 
may discount or sell them. Why may he not pledge them ? Either is 
a breach of the confidence reposed in him. He may sell because the 
property has been entrusted to him, — and he may pledge for the same 
reason ; for he who has the property has a disposing power, and the 
law has not limited it to be used in any particular manner. Perhaps 
the confidence reposed in bankers may be abused, and it might be wished 
that they could be restrained from abusing their trust. But an arbi- 
trary restriction cannot be imposed : any restriction would possibly check 
the facility of negotiation. As in cases of other property we say caveat 
emp,or, so in this particular case we may say to the customer who pre- 
fers to entrust his banker with his bills and cash, rather than to be at 
the trouble of doing his own business, caveat. 

Per Curiam, Eule discharged. 



1. The cases of Clarke v. Shee, 1 Cowper, 197, was an action of trespass on 
the case, ■wherein the plaintiff declared that the defendant was indebted to the 
rxqoi?"] pi^'^tiff in the sum of £1000 for divers *sums of money lent to the de- 
L J fendant There were two other counts for money laid out and expended, 
and for money had and received by the defendant for the plaintiff's use. The 
case was tried before Lord Mansfield, when a verdict was found for the plain- 
tiff, subject to the opinion of the Court upon the following case, — " That David 
Wood, being a clerk to the plaintiff, a brewer, and receiving money from the 
plaintiff's customers, and negotiable notes for the plaintiff's use, in the ordinary 
course of business paid several sums with the said money, and notes, at differ- 
ent times, to the amount of £459, 4*. M. to the defendant, upon the chances of 
the coming up of tickets in the State Lottery of 17 72, contrary to the Lottery 
Act of 1772." _ Argued for the Plaintiff. — The question is. Whether the 
plaintiff has a right to recover? This depends upon whether the money was 
originally the plaintiff^ property. If it was, and it appears that the defendants 
have no right to withhold it, the law will imply an assumpsit in this case. Now 
it is in evidence that the money was paid to the defendants for the insurance of 
chances, contrary to the express prohibition of Statute 12 Geo. IIL, c. 36, 
which in that case makes the receipt null and void ; therefore they are wrong 
doers, and have no right to withhold it. It is likewise in evidence, that this 
was the identical money which Wood had received for his master's use; conse- 
quently, if the testimony of Wood is admissible, the plaintiff is entitled to re- 
cover. Argued for the Defendant.— The plaintiff is not entitled to recover; 
for there is no contract either express or implied in respect of him ; nor was 
the money ever received as his : on the contrary, the whole transaction was be- 
tween the defendant and the_witnessf and so far as in an illegal proceeding 
like this, which is ipso facto void, there can be said to be any undertaking by 
the defendants, it has been complied with ; for though they were fortunate by 
the numbers not coming up, yet they have run the risk, and therefore performed 
their part of the agreement; consequently, there is no foundation for an action 
to recover back the money paid. It is like the case of money given to an 
agent to bribe a custom-house officer ; in which case no action will lie to re- 
cover it back ; or money paid upon an usurious contract, which was the case in 
Tompkins v. Barnett, 1 Said. 22. [Lord Mansfield.— That case has been de- 



BILLS or EXCHANGE. 163 

nied a thousand times.] But the principle is a sound one, and applies in this 
case ; namely, that ex maJefldo non oritur contractus; et in pari delicto potior 
est conditio defendentis. Here the transaction was illegal, therefore no action 
will lie. 

2. Lord Mansfield. — The question is, Whether the plaintiff can maintain this 
action ? This is a liberal action in the nature of a bill in equity ; and if, under 
the circumstances of the case, it appears that the defendant cannot *in r^ooai 
conscience retain what is the subject-matter of it, the plaintiff may well L ■^ °J 
support this action. There are two sorts of prohibitions enacted by positive 
law in respect of contracts. 1st, To protect weak or necessitous men from be- 
ing over-reached, defrauded, or oppressed. There the rule in pari delicto, potior 
est conditio defendentis, does not hold ; and an action will lie ; because where 
the defendant imposes upon the plaintiff it is not pen- delictum. The case of 
Tomkins v. Barnett has been long exploded. In Bosanquet v. Dashwood, 
Lord Hardwicke and Lord Talbot both declared their disapprobation of it : for 
in that case there was not pa/r delictum. In the case of money given by a 
bankrupt or his relations to a creditor, to sign the certificate, the transaction 
is against the express prohibition of the Act of Parliament, and both are parties 
to it, but not equally guilty ; for the bankrupt is an oppressed party; and there- 
fore the action will lie. The next sort of prohibition is founded upon genejp.1 
reasons of policy and public expedience. There both parties offending are 
B(3j}XB&j gmyxj-, pa/r est delictium,et potior est conditio defendentis. The prohi- 
bition in the Lottery Act, Statute 12 Geo. III., c. 63, is of this sort; and in this 
case no doubt but the defendants and the witness Wood were equally guilty. 
Therefore at Guildhall, upon the first impression, I was of opinion against the 
plaintiff; because I thought that the master could not stand in a better situation 
than the servant, and the servant was clearly ^orti'ceps criminis. But I changed 
my opinion : I thought, and now think, the plaintiff^does not sue as standing in 
the place of Wood his clerk ; for the money and notes which Wood paid to the 
defendants are the identical notes and money of the plaintiff. Where money or 
notes are paid bona fide, and upon a valuable consideration, they never shall 
be brought back by the true owner ; but where they come mala fide into a per- 
son's hands, they are in the nature of specific property; and if their identity can 
be traced and ascertained, the party has a right to recover. It is of public 
benefit and example that he should : but otherwise, if they cannot be followed 
and identified, because there it might be inconvenient, and open a door to fraud. 
Miller v. Race, 1 Burr. 452 ; and in Golightly v. Reynolds, the identity was 
traced through different hands and shops. Here the plaintiff sues for his iden- 
tified property, which has come to the hands of the defendants iniquitously and 
illegally, in breach of the Act of Parliament. Therefore they have no right 
to retain it; and consequently the plaintiff is well entitled to recover. 



*IN SCOTLAND, IT IS NOT NEOESSAET FOR THE HOLDER OF A BILL r*onn-t 
WHICH HAS BEEN LOST, STOLEN, OR FRAUDTJLENTLT ACQUIRED, •* 

TO PROVE THAT HE GAVE VALUE FOR IT, AND THE WANT OF VALUE 
CAN ONLY BE PROVED BY HIS WRIT OR OATH. 

I CRAWIURD V. THE ROYAL BANK. 

Feb. 24, 1749.-3. M. 8Y5. 

Hugh Crawpurd, clerk to the Signet, wanting to transmit £20 ster- 
ling to William Lang, merchant, in G-lasgow, inclosed in a letter an Old 
Bank-note for that sura, which was sent by postj and for security Mr. 
Crawfurd not only took a note of the number, but also wrote Ms name 
upon the back thereof. This letter being lost by some accident, an ad- 



164 ROSS ON COMMERCIAL LAW. 

vertisement was forthwith put in the newspapers, that the note was 
amissing, describing the sum, number, and all other particulars. The 
note at last appeared in the hands of the ' New Bank, and Mr. Crawfurd 
raised a multiplepoinding in the name of the Old Bank. 

The New Bank admitted that the note might have been stolen, but 
insisted that they were bonS, fide purchasers ; and that such is the nature 
of money and of bank-notes, which serve the purpose of money, that a 
bonS, fide purchaser or possessor is not subjected to a rei vindicatio, be- 
cause such a claim would be an impediment to commerce. 

Answered for Mr. Crawfurd. — Bank-notes have no privilege by the 
law of Scotland above bills of exchange, other than that they are taken 
payable to the bearer, which makes them pass from hand to hand with- 
out necessity of indorsation ; but which, at the same time, gives them no 
other privilege than what belongs to every sort of moveable. The bare 
possession of a bank-note, without consent of the proprietor, will no more 
transfer the property than the bare possession of a table or of a chair. 
PCssession, indeed, presumes the consent of the former proprietor ; but 
then this, like other presumptions, must yield to positive proof; and 
therefore, if the person who vindicates proves his property, et quomodo 
r*9qm ^^^^^^ possidere, so as to take off the presumption arising *from 
L -• possession, he must prevail. And the present case is precisely 
similar to that of a blank bond while that deed was in fashion : posses- 
sion of a blank bond presumed property ; but no mortal ever doubted 
that the true creditor had access to vindicate the same, if he could prove 
guomodo desiit possidere. Nay, further, even current coin has not this 
privilege ; it is true, that if a guinea be stolen, the proprietor cannot 
vindicate the same, unless he be able to prove his property, et quomodo 
desiit possidere, viWoh. can seldom happen ; but here non deficit jus, sed 
prohatio. And this matter cannot be better explained than in the words 
of Javolenus, 1. 78, Solution : — " Si alieni nummi iuscio vel invito 
domino soluti sunt, manent ejus cujus fuerunt. Si mixti essent, ita ut 
discerni non possent, ejus fieri qui accepit, in libris Gaii scriptum est : 
ita ut actio domino, cum eo qui dedisset, furti competeret." 

Replied. — If money or bank-notes were, like other moveables, subject 
to a/j-ei vindicato, the commerce of money or bank-notes would be more 
dangerous than of other moveables. If a man purchase a horse or a flock 
of sheep, he has the warrandice of the vender to rely on ; but money or 
bank-notes cannot be traced, for a man may have plenty of both without 
being able to say from what hand any one guinea or bank-note came. 
For this reason, as money and bank-notes are the great vehicles of com- 
merce, it is universally received in practice, that the circulation of money 
and of bank-notes should be absolutely free, by denying a rei vindicatio. 
So far strict law yields to the favour of commerce ; nor is it attended 
with great hardship to any person, considering how much easier it is to 
preserve money and bank-notes from theft, than almost any other sort of 
moveables. 

The Co0ET were unanimous on two points : — " That money is not 
subject to stny vitium reale ; and that it cannot be vindicated from the 
bona fide possessor, however clear the proof of the theft may be. 2do, 



BILLS OF EXCHANGE. 165 

That bank-notes serving the purposes of money must be entitled to the 
same privileges. And therefore that Mr. Crawfurd had no claim to the 
note in question." 



*II. — LAMBTON V. MAKSHALL. [*231] 

June 21, 1799.— S. M. Bill, App. 11. 

On the 17th of March, 1797, John Marshall, for Carrick, Brown, and 
Company, bankers in Grlasgow, drew a bill, bearing to be his " first of 
exchange," on Moffat, Kensington, and Company, their correspondents 
in London, payable to George Millar and Company, or order, fifty days 
after date ; consequently, the 6th May was the day of payment, and the 
9 th the last day of grace. 

It was indorsed by Millar and Company, and, after passing through 
several other hands, came into possession of Weatherall and Geering,* of 
London, whose clerk, on the 17th April, had his pocket-book, containing 
the bill, stolen from him, as he was carrying it for acceptance. 

The theft was notified in the Daily Advertiser of the 18th. But the 
bill not being recovered, Marshall granted a second, " his first of the 
same date and tenor not being paid," on receiving an obligation from 
Weatherall and Geering to indemnify his Company against the appear- 
ance of the first. 

On the 5th of May, the first bill, with seven blank indorsements on it 
was presented to Richard John Lambton and Company, bankers, at New- 
castle, by the last indorser of it, with whom they were totally unac- 
quainted. 

They discounted and remitted it to their correspondents in London, 
who presented it to Mofiat and Company for payment on the 9th May. 

This was refused, as the second bill had been previously paid. The 
first bill was protested by Lambton and Company, and a charge given to 
Marshall for payment. 

In a suspension, appearance was made for Weatherall and Geering, 
and Marshall, 

For Suspenders, Pleaded, — Marshall, granting the second bill, acted 
according to established practice, and as the loss must fall either on 
Weatherall and Geering, or Lambton and Company, ^t ought to be borne 
by the latter, who, in discounting the bill to an utter stranger, not re- 
commended to them, transgressed a rule of bankers, which is very r^^noo-i 
salutary *in preventing persons acquiring bills mala fide from L J 
obtaining payment ; and particularly, after the advertisement of the 18th 
April, the chargers cannot be considered as without blame in the trans- 
9,ction. 

Answered. — Marshall was not bound to grant a second bill, without 
being indemnified against the appearance of the first, as is evident even 
from the conduct of parties in this case ; 9th and 10th William III., c. 

17' §3- ... 

The chargers acted bona fide, and according to the established practice 



166 EOSS ON COMMERCIAL LAW. 

of bankers, who daily discount bills to utter strangers, (indeed travellers 
cannot always have letters of recommendation with them,) trusting to 
their knowledge of the handwriting of the other obligants, and have no 
concern with the terms on which it has been acquired by the present 
holders ; Burrow's Keports, vol. iii. p. 1516, &c-., and 1520, &c., vol. i. 
p. 452 ; Douglas's Keports, pp. 611, 633, 634 j Kyd, pp. 104, 105. 

Weatheralland G-eering fiught to suffer from the inattention of their 
clerk originally ; and from their notifying their loss in the Advertiser 
only, which is not read at Newcastle, and not in the London Gazette and 
provincial newspapers, and otherwise, as is usual in similar cases. 

Lord CuLLEN, Ordinary « In respect it is averred by the chargers, 

that they did bona fide pay full value for the indorsation to the bill 
charged on, and that the suspender has offered no evidence to the con- 
trary, or to show they were in the knowledge of the said bill having 
been stolen from, or lost by the clerk of Messrs. Weatherall and Geering, 
found the letters orderly proceeded, reserving the suspenders' claim of 
relief against them." 

Upon advising a petition, with answers, the CouaT, on the general 
ground that there is no rei vindicatio against onerous holders of bills and 
bank-notes, unanimously adhered. 



r^nqq-i *Iii the case of Swinton v. Beveridge, June 21, 1799, a letter-carrier 
L J of the General Post Office had abstracted some bank notes from a letter, 
and had put two of them in circulation before he was detected. The Solicitor 
of the Post Office paid value for them to the holders, and lodged them with 
the Cleik of Justiciary as evidence against the letter-carrier. After the convic- 
tion of the letter-carrier the' original owner of the notes brought an action 
against the Solicitor of the Post Office, for the purpose of recovery of them. 
The defender pleaded — ^It is completely fixed, from views of commercial expe- 
diency, that an onerous holder of money bank-notes or bills of exchange, is 
liable to no extinsic objection. The pursuer, therefore, would olear^ have no 
claim against the rankers from whom the notes were purchased. Instead of 
purchasing the notes, the object of the prosecution might have been obtained 
by a warrant on the holders for production of them, and there could have been 
no doubt of their right to recover them after the trial. The defender is pre- 
cisely in their place. The Court unanimously preferred the defendant on the 
grounds stated by him. 



IN AN ACTION ON A BILL OR NOTE WHICH HAS BEEN LOST, STOLEN, OR 
FRAUDULENTLY ACQUIRED, IT IS NOT SUFFICIENT FOE THE DEFENDANT 
TO SHOW THAT THE PLAINTIFF TOOK THE BILL OR NOTE UNDEE CIR- 
CUMSTANCES WHICH OUGHT TO HAVE EXCITED THE SUSPICION OF A 
PRUDENT MAN, BUT HE MUST SHOW THAT HE WAS GUILTY OF SUCH 
GROSS NEGLIGENCE AS EVIDENCES FRAUD. * 

I LAWSON V. WESTON. 

July 16, 1801.— -B. 4 Esp. 56. 
This was an action brought to recover the amount of a country bill of 



BILLS OP EXCHANGE. 167 

exchange for £500, drawn by one Vazie, in favour of Stokoe, at fifty 
days, on the defendants, who were the partners of the Southwark Bank, 
and accepted by them. 

The plaintiffs were the members of the Kichmond Bank, in Yorkshire, 
where they resided. They had discounted the bill in the usual course of 
their business at Kichmond, for a person who brought it to their shop, but 
who was unknown to them ; but the bill had been drawn in their neigh- 
bourhood at *Newca8tle, and they were perfectly acquainted with r^no/n 
all the hands-writing of the several parties to it. L •^ J 

The bill had been regularly indorsed by Stokoe to a person of the name 
of Shears, who had also put his name on it. Shears lost it, or it was 
stolen from him ; but it was proved that he had advertised it immediately 
on its being lost. 

The names of Stokoe and Shears were on the back of the bill ; and on 
its being discounted, the persop who discounted was desired to put his 
name on it ; he put the name of John Warren on it ; and no further in- 
quiry was made by the plaintiffs, who paid him the amount, deducting 
the discount. 

The defendants were indemnified by Shears. 

The Attorney-General stated the grounds upon which the payment of 
the bill was resisted : That he was in possession of evidence to show that 
the bill was the property of Shears, by whom it had been lost : That 
Shears had advertised it, and so given notice to have it stopped in pay- 
ment : That though a person might pay a bill to which he was a party 
to one who had come dishonestly by it, by reason of the personal liability 
attached to his name on the bill, a banker, or any other, should not dis- 
count a bill for a person unknown, without using diligence to inquire 
into the circumstances, as well respecting the bill as of the person who 
offered to discount it : That it was the usual course of the banking trade, 
which he was prepared with evidence to show, that where a bill of the 
amount of the present was offered for discount, never to do it without 
making such inquiries; and that he would call several bankers to prove 
to that effect. 

Lord Kenyon I think the point in this ease has been settled by the 

case of Miller v. Kace, in Burrow. If there was any fraud in the trans- 
action, or if a bona fide consideration had not been paid for the bill by 
the plaintiffs, to be sure they could not recover ; but to adopt the prin- 
ciple of the defence to the full extent stated, would be at once to paralyze 
the circulation of all the paper in the country, and with it all its com- 
merce. The circumstance of the bill having been lost might have been 
material if they could bring knowledge of that fact *home to the r^osKT 
plaintiffs. The plaintiffs might or might not have seen the adver- L J 
tisement ; and it would be going great length to say, that a banker was 
bound to make inquiry concerning every bill brought to him to discount : 
it would apply as well to a bill for £10 as for £10,000. 

With respect to the evidence offered of the usage of other banking- 
houses, I cannot admit it : it depends on their mode of doing their busi- 
ness, or on their funds. This could not affect others who acted on 
different principles, but with equal integrity. That which had been 



168 BOSS ON COMMERCIAL lAW. 

called the usage of trade, depended on the different degree of confidence 
which different men possessed, and not on any settled or regular rules. 

The magnitude of the bill has been pressed as a ground of suspicion by 
the defendant's counsel : I do not feel it of such importance. A person 
going to the country, and having occasion to bring a sum of money, 
might prefer bringing it in that way rather than in money. I therefore 
see no misconduct imputable to the plaintiffs ; but I think they are bound, 
under the circumstances of the case, to prove the value actually paid for it. 

The plaintiffs proved the consideration paid for it, and had a verdict. 



II GILL V. CUBITT. 

Nor. 17, 1824.— E. 3 B. & C. 466. Eng. Com. Law Beps. vol. 10. 
Declaration by the plaintiff as indorsee of a bill of exchange, bearing 
date the 19th of August, 1823, drawn by one R. Evered and accepted 
by the defendants. Plea, general issue. 

At the trial before Abbott, C. J., at the London sittings after Hilary 
Term, 1824, the plaintiff proved the handwriting of the acceptors and 
indorser. The defendant then proved, that on the 20th of August a letter 
containing the bill in question and two others, was inclosed in a parcel 
and delivered at the Green Man and Still coach-office, and booked for 
Birmingham. The parcel arrived at Birmingham by the coach, but the 
r*23fil ^^^^^ containing the bills had been opened, and *the bills taken 
L -1 out of it. On the following day the drawer advertised the loss 
of the two bills in the newspapers. The plaintiff, who was a bill broker 
in London, then proved by his nephew, who assisted him in his business, 
that the bill was brought to his office between the hours of nine and ten 
on the morning of the 21st of August, by a person having a respectable ■ 
appearance, and whose features were familiar to the witness, but whose 
name was unknown to him. He desired that the bill might be discounted 
for him, but the witness at first declined so to do, because the acceptors 
were not known to him. The person who brought the bill then said, 
that a few days before he had brought other bills to the office, and that 
if inquiry was made it would be found that the parties whose names were 
on this bill were highly respectable. He then quitted the office and left 
the bill, and upon inquiry the witness was satisfied with the names of the 
acceptors. The stranger returned after a lapse of two hours, and indorsed 
the bill in the name of Charles Taylor, and received the full value for it, 
the usual discount and a commission of two shillings being deducted. 
The witness did not inquire the name of the person who brought the bill, 
or his address, or whether he brought it on his own account or otherwise, 
or how he came by the bill. It was the practice in the plaintiff's office 
not to make any inquiries about the drawer or other parties to a bill, 
provided the acceptor was good 

Upon this evidence the Lord Chief Justice told the jury, that there 
were two questions for their consideration ; first, whether the plaintiff had 
given value for the bill, of which there could be no doubt; and, secondly, 
whether he took it under circumstances which ought to have excited the 



BILLS OF EXCHANQB. 169 

suspicion of a prudent and careful man. If they thought that he had 
taken the bill under such circumstances, then, notwithstanding he had 
given the full value for it, they ought to find a verdict for the defendant. 
Then the Lord Chief Justice, after stating the evidence and commenting 
upon the practice in the plaintiff's office of discounting bills for any per- 
sons whose features were known to him, but whose names and abode 
were unknown, without asking any questions, asked the jury what they 
would think if a board were affixed over an office with *this r,nq7T 
notice, " Bills discounted for persons whose features are known, L -I 
and no questions asked ?" 

The jury having found a verdict for the defendants, a rule nisi for a 
new trial was obtained in Easter Term last, upon the ground that the 
plaintiff having paid a valuable consideration for the bill, was entitled 
to recover its value; and, secondly, that the case had been put too 
strongly to the jury, when it was compared to the case of a public no- 
tice given by a broker that he would discount all bills without asking 
questions. 

Scarlett and ParJce now showed cause. — Where a bill or note has been 
acquired by theft, and afterwards comes to the possession of a holder for 
valuable consideration, it is incumbent upon him when he brings an 
action, not only to show that he paid that consideration, but also that he 
used due diligence to ascertain, before he took the bill or note, whether 
the party bringing it to him came by it honestly. Unless he does this 
he cannot be said to have taken it bon§, fide, although he may have paid 
the full value for it. It is true, that in Lawson v. Weston, Lord Kenyon 
was of opinion, that it was sufficient for a person who discounted such a 
bill, to show that he paid value for it, but the propriety of that decision 
has always been doubted. If it is to be laid down as a rule, that a party 
in possession of a stolen bill or note may obtain the value of it without 
being subjected to any inquiry, it will give a great facility to the disposal 
of property so acquired, and operate as an encouragement to fraud and 
theft. It is desirable that the rule laid down should have the effect of 
preventing parties, who are either guilty or cognizant of such fraud, 
from profiting by it. Then if that be the correct rule upon the subject, 
the Lord Chief Justice was well warranted in the observations he made 
to the jury, and their verdict is supported by the evidence. The plain- 
tiff took the bill from a person whose features were known to him, but 
of whom he knew nothing else, and made no inquiry as to how he came 
by the bill ; and it was in evidence that he always conducted his busi- 
ness in this mode. Surely that is like the case of a person giving a 
public notice, " Bills discounted for persons whose features are known, 
and no questions asked." 

'"Gurney and F. Pollock, contra. — A party who has paid the r-Moo-i 
full value for a bill which has been lost or stolen, is entitled to L J 
recover the amount from the acceptor. The circulation of negotiable 
paper would be greatly impeded if it were laid down as a rule, that a 
party discounting a bill was bound to investigate the title of the person 
from whom he receives it. In the case of Lawson v. Weston, the plain- 
tiffs, who were bankers, had discounted the bill in the usual course of 



170 aOSS OH OO.MMEEOIAL IiAW. 

their business for a person who brought it to their shop, but who was 
unknown to them. It was contended by the defendant, that although a 
person might pay a bill, to which he was a party, to one who had come 
dishonestly by it, by reason of the personal liability attached to his name 
on the bill, a banker or any other should not discount a bill for a person 
unknown without using due diligence to inqtiire into the circumstances, 
as well respecting the bill as of the person who offered to discount it. 
But Lord Kenyon said, " that to adopt the principle of the defence to 
the full extent stated, would be at once to paralyze the circulation of all 
the paper in the country, and with it all its commerce. The circum- 
stance of the bill having been lost, might have beea material if they 
could bring knowledge of that fact homo to the plaintiffs. They might 
or might not have seen the advertisement, and it would be going great 
length to say, that a banker was bound to make inquiry concerning every 
bill brought to him to discount, it would apply as well to a bill for £10 
as for iglOjOOO." In that case, therefore, the very point now raised was 
made and overruled by Lord Kenyon, and although the bill was of the 
amount of JE500, the parties acquiesced in that decision. The principle 
acted upon in that case had been previously adopted in Miller v. Eace, 
Grant v. Vaughan, and Peacock v. Rhodes. At aU events, the case was 
put too strongly to the jury by my Lord Chief Justice. It was not like 
the case of a public notice, that all bills be discounted for persons whose 
features were known, and no questions would be asked. That mode of 
putting it excited an undue prejudice against the plaintiff, and the case 
ought to be submitted to a second jury. 

P^nog-, Abbott, C. J. — If we thought that, upon reconsideration of 
L -I *the ovidence, another jury ought to come to a different eoncln- 
-sion, we would send the case down to another trial. But being of opinion 
that the proper conclusion has been drawn from the evidence, we think 
that this rule ought to be discharged. I agree with the counsel for the 
plaintiff, that this case is hardly distinguishable &om Lawson v. Weston. 
If there is any distinction it is, that in this case the plaintiff's clerk said 
it was not usual with the plaintiff to ask any questions, or to make any 
inquiry if bills were brought to them by persons whose features they 
supposed themselves to be acquainted with, provided they were satisfied 
with the names of the acceptors. I cannot help thinking, that if Lord 
Kenyon had anticipated the consequences which have followed from the 
rule laid down by him in Lawson v. Weston, he would have paused be- 
fore he pronounced that decision. Since the decision of that case, the 
practice of robbing stage-coaches and other conveyances of securities of 
this kind, has been considerable. I cannot forbear thinking, that that 
practice has received encouragement by the rule laid dowp in Lawson v. 
Weston, by which a facility has been given to the disposal of stolen pro- 
perty of this description. I should be sorry if I were to say anything, 
sitting in the seat of judgment, that either might have the effect, or rea- 
sonably be supposed to have the effect of impeding the commerce of the 
country, by preventing the due and easy circulation of paper. But I am 
decidedly of opinion, that no injury will be done to the interests of com- 
merce by a decision that the plaintiff cannot recover in this action. It 



BILLS OP EXCHANGE. 171 

appears to me to be for the interest of oommeree, that no person should 
take a security of this kind from another without using reasonable cau- 
tion. If he take such security from a person whom he knows, and whom 
he can find out, no complaint can be made of him. In that case he has 
done all any person could do. But if it is to be laid down as the law of 
the land, that a person may take a security of this kind from a man of 
whom he knows nothing, and of whom he makes no inquiry at all, it 
appears to me that such a decision would be more injurious to commerce 
than convenient for it, by reason of the encouragement it would afford 
to the purloining, stealing, and defrauding persons of securities of this 
sort. The interest of *commerce requires that bonS,fide and real 
holders of bills, known to be such by those with whom they are L ■^^^j 
dealing, should have no difficulties thrown in their way in parting with 
them. But it is not for the interest of commerce that any individual 
should be enabled to dispose of bills or notes without being subject to 
inquiry. I think the sooner it is known that the case of Lawson v. 
Weston is doubted, at least by this Court, the better. I wish doubts had 
been cast on that case at an earlier time. If that had been done, this 
plaintiff probably would not have suffered. Coming to the facts of this 
case, they are these, that the young man, acting according to the course 
which the plaintiff when he was present followed, gave money for this 
bill to a person of whom, though he supposed he knew him, he really 
knew nothing. This is done at a very early hour, between nine and ten 
in the morning on the day after the bill was lost. I cannot help saying 
that that practice, in the plaintiff's business of a bill broker, is a practice 
inconvenient for the reasons I have already given. It seems to me, that 
it is a great encouragement to fraud, and it is the duty of the Court to 
lay down such rules as will tend to prevent fraud and robbery, and not 
give encouragement to them. For these reasons, notwithstanding all the 
unfeigned reverence I feel for everything that fell from Lord Kenyon, by 
whom Lawson v. Weston was decided, I cannot think the view taken by 
that learned lord at that time was a correct one ; and that being so, I am 
of opinion that this rule ought to be discharged. 

Bayley, J. — I agree that the way in which my Lord Chief Justice put 
this case for the consideration of the jury, by asking what would be the 
case if a man were to put over his shop, " Bills discounted for strangers, 
if they have good names on them, without any questions being asked," 
was a very strong way of putting the case for their consideration. But I 
think it was no more than the facts of this case warranted, and that he was 
putting, as a general proposition, that which exactly squared with the par- 
ticular facts of this case. If a man commonly dealt in that way; (and it 
appeared to be the plaintiff's habit as a broker,) it would warrant such an 
advertisement as that which was described. If in general that was not the 
•plaintiff's course and habit, then in this particular instance he r^A-i-i 
deviated from his general course. In this case a party goes to a L J 
shop between nine and ten in the morning to get a bill discounted ; the 
clerk does not know his name ; he thinks he knows his features ; he does 
not know where he lives; he knows nothing at all about him. The 
bill is left for two hours, and at the expiration of that time the party 



172 BOSS ON OOMMEROIAIi LAW. 

comes back again; and the clerk then haB the opportunity of asking 
names, and whether he came on his own account, or from any and what 
house. No question of that description is put to him. Under these cir- 
cumstances, I think it was the duty of my Lord Chief Justice to put it 
to the consideration of the jury whether there was due caution used by 
that party in that particular instance. If there was not due caution used, 
the plaintiff has not discounted this bill in the usual and ordinary course 
of business, or in that way in which business properly and rightly con- 
ducted would have required. But it is said that the question usually 
submitted for the consideration of the jury in cases of this description, 
up to the period of time at which my Lord Chief Justice's direction was 
given, has been whether the bill was taken bona fide, and whether a val- 
uable consideration was given for it. I admit that has been generally 
the case ; but I consider it was parcel of the bona fides whether the 
plaintiff had asked all those questions which, in the ordinary and proper 
manner in which trade is conducted, a party ought to ask. I think, 
from the manner in which my Lord Chief Justice presented this case to 
the consideration of the jury, he put it as being part and parcel of the 
bona fides ; and it has been so put in former cases. In the case of Mil- 
ler V. Race, 1 Burr., Lord Mansfield says, — " Here an innkeeper took 
the note bona fide in his business from a person who made the appear- 
ance of a gentleman. Here is no pretence or suspicion of collusion with 
the robber. For this matter was strictly inquired anS examined into at 
the trial ; and is so stated in the' case that he took it for a full and 
valuable consideration, in the usual course of business. Indeed, if there 
had been any collusion, or any circumstance of unfair dealing, the case 
had been much otherwise." Now, the question which my Lord Chief 
r*2421 ''^'*®*'''^ ^^^ P"* *" *^^ consideration of the jury, whether *a 
L -' party uses due caution or not, is, in other words, putting to them 
whether he took it in the usual course of business ; for the course of 
business must require, in the usual and ordinary manner of conducting 
it, a proper and reasonable degree of caution necessary to preserve the 
interest of trade. The next case in order of time, is Grant v. Vanghan. 
Mr. Justice Wilmott there says, — "The note appears to have been taken 
by him fairly, and bona fide in the course of trade, and even with the 
greatest caution. He made inquiry about it, and then gave the change 
for it; and there is not the least imputation or pretence of suspicion that 
be had any notice of its being a lost note." That learned Judge did not 
consider the question of bona fides to be merely whether the note was 
taken by a party without having any real suspicion in his own mind, but 
whether he had taken it in the usual course of trade, and with caution. 
In Peacock v. Rhodes, a shopkeeper at Scarborough took from a perfect 
stranger a bill of exchange. The latter bought certain goods in the way 
of the plaintiff's trade. Lord Mansfield says, — « The question of mala 
fides was for the consideration of the jury. The circumstance that the 
buyers and the drawers were strangers to the plaintiff, and that he took 
the bill for goods on which he had a profit, were grounds of suspicion 
very fit for their consideration. But they have considered them, and 
have found it was received in the course of trade, and therefore the case 



BILLS OP EXOHANQB. 173 

is clear." Then if in that case those were questions fit for the consider- 
ation of a jury, as part and parcel of the question of bona fides, is it not 
also a fit and proper question for their consideration, (when the point to 
be decided is whether a man has acted boni fide or not,) whether he has 
inquired with that degree of caution which, in the ordinary course of trade, 
a prudent trader ought to use ? That was the question propounded by 
my Lord Chief Justice in his direction to the jury j and they have exer- 
cised their judgment on it. I think the question was a fit question for their 
decision, and I think their decision was one with which we are not at 
liberty to quarrel. On the contrary, it appears to me to be material for 
the interests of trade, to lay down as a rule that a party cannot in law 
be considered to act bon9. fide, or with due caution and due diligence, if 
he takes a bill of exchange from a *person whose features alone r^^oj^oT 
he knows, without knowing what his name is, where he lives, or L J 
whether he is a person with whom he has been in the habit of trading. 
If we were to say that in this instance there had been due caution, it 
would certainly be giving a great facility to the disposal of bills of ex- 
change which have been lost or stolen, by persons who have found or 
dishonestly obtained them. For these reasons it appears to me that my 
Lord Chief Justice took the right view of this case; that it was con- 
sistent with the doctrine laid down in former cases ; and that the deci- 
sion of the jury was warranted by the evidence. 

HoLROYD, J. — I think the rule was correctly laid down to the jury 
by my Lord Chief Justice, and that there is no ground for granting a 
new trial. A party who discounts a bill which has been stolen is bound 
to 'show, not only that a good consideration was really and bona fide 
given for the bill, (although that of itself would tend to the establishing 
of the other point requisite for him to show,) but he must also make it 
appear to the satisfaction of the jury that he actually took it bonE fide. 
If he takes it with a view to profit arising from interest or commission, 
under circumstances affording reasonable ground of suspicion, without 
inquiring whether the party of whom he takes it came by it honestly or 
not, or if he takes it merely because it is drawn upon a good acceptor, 
then he takes it at a risk, (or what ought, in the contemplation of a rea- 
sonable man, to be a risk,) whether the bill be stolen or not ; he takes it 
at his peril. I cannot agree to the doctrine laid down in Lawson v. 
Weston. The question whether a bill or note has been taken bona fide, 
involves in it the question whether it has been taken with due caution. 
It is a question of fact for the jury, under all the circumstances of the 
case, whether a bill has been taken bona fide or not; and whether due 
and reasonable caution has been used by the person taking it. And if a 
bill be drawn upon parties of respectability capable of answering it, and 
another person discounts it merely because the acceptance is good, 
without using due caution, and without inquiring how the holder came 
by it, I think that the law will not, under such circumstances, assist the 
parties so taking the *bill, in recovering the money. If the bill be rjo^^-i 
taken without using due means to ascertain that it has been hon- *■ -1 
estly come by, the party so taking on himself the risk for gain must 
take the consequence if it should turn out that it was not honestly ao- 

April, 1854 12 



174 BOSS ON COMMERCIAL LAW. 

quired by the person of whom he received it. Here the person in pos- 
session of the bill was a perfect stranger to the plaintiff, and he dis- 
counted it, and made no inquiry of whom the bill had been obtained, or 
to whom he was to apply if the bill should not be taken up by the 
acceptor. I think those circumstances tend strongly to show that the 
party who discounted the bill did not choose to make inquiry, but sup- 
posing the questions might not be satisfactorily answered, rather than 
refuse to take the bill, took the risk in order to get the profit arising 
from commission and interest. I am therefore of opinion that the direc- 
tion of my Lord Chief Justice to the jury was correct in point of law, 
and that they have drawn the proper conclusion, and that there is no 
ground for granting a new trial. Rule discharged. 



Ill CROOK V. JADIS. 

Jan. IT, 1834.— B. 5 B. & Ad. 909. Eng. Com. Law Eep. Vol.27. 

Assumpsit by the plaintiff, as indorsee, against the defendant, as the 
drawer of a bill of exchange, dated the 23d of May, 1831, for £1000, 
accepted by Lord Foley, and payable eleven months after date. Plea, 
general issue. 

At the trial before Denman, C. J., at the Middlesex Sittings after 
last Michaelmas Term, the defence was, that the bill, as between the 
drawer and acceptor, was a mere accommodation bill, and had been issued 
by the defendant to a bill broker to get discounted} and that- the latter 
had fraudulently, and without any authority, sold it to one Howard, for 
whom the plaintiff discounted it. On the evidence it was contended, 
that the plaintiff had not used due caution, and that he had taken the 
_„._-. bill under circumstances which ought to have excited the *sus- 
L -I picion of a prudent man ; that the bill had not been fairly ob- 
tained, and therefore he was not entitled to recover. Lord Denman, C. 
J., told the jury to find for the plaintiff, if they thought he had not been 
guilty of gross negligence in taking the bill under the circumstances 
given in evidence. A verdict having been found for the plaintiff, 
, Sir James Scarlett now moved for a new trial, on the ground that the 
true question which ought to have been submitted to the jury was, whether 
the plaintiff had taken the bill under circumstances which ought to have 
excited the suspicion of a prudent man ; Down v. Hailing. 

Denman, C. J. — I used the expression gross negligence advisedly, be- 
cause I thought nothing less ought to have prevented the plaintiff from 
recovering on the bill. 

LiTTLEDALE, J. — There must be gross negligence, at least, in a case 
like the present, to deprive a party of his right to recover on a bill of 
exchange. 

Taunton, J. — I think the case was properly submitted to the jury. 
I cannot estimate the degree of care which a prudent man should take. 
The question put by the Lord Chief Justice, whether the plaintiff was 
guilty of gross negligence, was more definite and appropriate. 



BILLS OF EXCHANGE. 175 

Patteson, J. — I never could understand what is meant by a party's 
taking a bill under circumstances which ought to have excited the sus- 
picion of a prudent man. Eule refused. 



IV.— BACKHOUSE v. HARRISON. 
Jan. 31, 1834.-c;-B. 5 B. & Ad. 1098. Eng. Com. Law Eeps. vol. 27. 

Assumpsit by the plaintiff, an officer of the York City and County 
Bank Company, upon two bills of exchange, for *£26, 19«. 9d., 
and ^620, indorsed to the Company, against the defendant as an L "J 
indorser. 

At the trial ^before Alderson, J., at the Yorkshire Spring Assizes, 
1833, it appeared that about two o'clock, p. m., on the 25th of Septem- 
ber 1832, (being the first day of Howden fair,) a man dressed like a sailor, 
accompanied by another person dressed in the same manner, came to the 
Company's office at Howden, and requested one Clough, their Clerk, who 
managed their business there, to discount the bill of £26, 19«. 9d. The 
bill being much discolored, Clough asked how it came to be so. The 
man said it had fallen, with his pocket-book, into the Knottingley and 
Goole Canal, and that he had been searching two days and two nights 
for it. This statement was corroborated by his companion. Clough 
then looked at the bill, and seeing the names of J. and R. Harrison upon 
it, asked the man how he came by it. He said he had got it from those 
gentlemen in payment of a cargo of coals ; that he had two vessels in 
which he traded between Hull and the West Riding, and that he had 
come to Howden to purchase two horses to draw his vessels up and down 
the canal. Clough then agreed to discount the bill, and offered it to the 
man to indorse, but he said he could not write, upon which Clough wrote 
the name given to him by the man (William Moore,) to which the latter 
affixed his mark. Clough stated, in evidence, that it was not uncommon 
for persons unable to write to have such bills. Having received the 
money for this bill, the man produced the other bill, and said, that if the 
money he had received was not sufficient to pay for the horses, be would 
return and get the second bill discounted. In an hour and a half he re- 
turned for that purpose, and Clough discounted the bill for ^20. Clough 
asked the man if he was known in the town. He said he did not know 
any one there. 

For the defendant it was proved, that the bills in question were lost 
by a sister of the defendant, she having dropped her reticule contain- 
ing them into the canal between Goole and Knottingley, on the 9th of 
September 1832, and that the reticule and its contents were found by 
Moore. It was proved by a clerk of the Bank of England, that it was 
the practice there, and at all its branch banks, not to discount bills for 
strangers *without requiring a reference ; nor to exchange Bank r#o47T 
of England notes for strangers, and certainly not a dirty bill for L J 
a man who could not write. The same statement was made as to the 
practice of several other banks. The jury found, upon questions specially 
submitted to them by the learned Judge, that the plaintiff took the 



176 ROSS ON OOMMEROIAL LAW. 

bills bona fide, but under such circumstances that a reasonable cautious 
man would not have taken them. They also found, that the defendant 
had not used due diligence in making the loss known. The learned 
Judge then directed the jury to find a verdict for the defendant, but re- 
served liberty to the plaintiff to move to enter a verdict for the amount 
of the bills, if the Court should be of opinion that the defendant, having 
been guilty of the first negligence, was thereby estopped from setting up 
the negligence of the plaintiff. F. Pollock was to have shown cause, 
but in his absehCe (Jan. 27th) the Court first heard 

€resswell for the Plaintiff. — If the defendant was guilty of the first 
negligence, by not advertising the loss of the bills, the plaintiff was en- 
titled to recover. [Denman, C. J. — Ddes not Easley v. Crockford bear 
on that point ?] That was a different case. There the plaintiff (in tro- 
ver) proved that, in September 1830, he went to a public meeting, where 
he was robbed of a £200 Bank of England note. He advertised his 
loss in the newspapers, and in June 1832 the note was traced to the pos- 
session of the defendant, who stated that he had received it in payment 
of a debt on the Derby, but he could not say from whom. The jury 
found a verdict for the plaintiff, and that the note was received by the 
defendant without due circumspection. A rule was obtained for a new 
trial^ on the ground that the plaintiff (who had lost the note) had not 
taken due care of his property, but was instrumental to his own loss in 
going to a mixed assembly with a large sum of money in his pocket. 
The Court thought that the plaintiff's negligence, in having attended a 
mixed meeting with so large a sum, did not confer a title to the note on 
the defendant, who had received the note without ordinaay care j and 
that the latter had no title as against the real owner. Here the action 
is brought by a banker, who discounted these bills, against an indorse*, 
r*24.81 ^^'^ ^°^^ them. 'Assuming that the want of due caution in a 
L J person discounting a bill, though he does it bona fide, may be in- 
sisted upon in an action by the real owner in an ordinary, case, still the 
owner is not at liberty to allege it, if he himself has been guilty of the 
first negligeiice, and thereby in some measure instrumental to the loss 
which he seeks to throw upon the holder. But, secondly, it is no de- 
fence that the plaintiff took the bill bona fide, but under circumstances 
which oug'ht to have excited the suspicion of a prudent man that it had 
not been fairly obtained. The defendant is bound to show that the plain- 
tiff was guilty of gross negligence at least. [Taunton, J. That point 

was decided by us this Term in Crook v. Jadis.] The question, whether 
a bill or note has been taken bona fide, involves in it the question, whether 
it had been taken with due caution, per Holroyd, J., in Gill v. Cubitt, 
3 B. & C. 477 : Bayley, J., there said, that he considered it was parcel 
of the bona fides, whether the plaintiff had asked all those questions which, 
in the ordinary and proper mode in which trade is conducted, a party 
ought to ask ; and in a case at Nisi Prius, a few days ago, Parke J., ex- 
pressed his opinion that negligence only bore upon the question of bona 
fides. The attempt to insist on want of caution, as distinguished from 
want of good faith, has only led to inconvenience. The plaintiff, then, 
is entitled to a verdict,\ because gross negligence was not proved: and 



BIIiLS 07 EXOHANQE. 177 

assuming that the fact of the plaintiff having taken this bill bona fide, 
but under circumstances which ought to have excited the suspicion of a 
prudent man, would have been a defence in an ordinary case, still the 
defendant, not having given notice to the public of his loss, is estopped 
from making that defence. Such notice might have prevented the plains 
tiff from discounting the bills. [Denman, C. J. In Snow v. Peacock, 
8 Bing. 410, Best C. J., says, that one who has lost a note payable to 
bearer, ought immediately to give notice of his loss to the public, in such 
a manner as ia most likely to prevent innocent persons from taking it.] 

F. Pollock and Martin afterwards showed cause. The defendant, by 
not having given notice to the public of the loss of the bills, is not estop- 
ped from saying that the plaintiff took them under circumstances which 
would have excited the suspicion *of any prudent man; and that r^n^q-i 
is a sufficient defence to this action. His misconduct in not hav- L J 
ing advertised his loss to the public, would be no answer to an action of 
trover brought by him to recover the bills. The property in the bills 
was at one time in the defendant. The question is. Whether he has 
parted with them under circumstances which divested the property ? If 
it still continued to be in him, and another party discounted the bills, 
under circumstances of suspicion which did not warrant his doing so, the 
owner may recover them in trover. In the case of a collision of two 
ships, if an error has been committed in the management of either, the 
owner of that ship will have no right of action against the owner of the 
other. The plaintiff acquired no property in the bills under the circum- 
stances in which he took them. The fact of the defendant not having 
advertised their loss cannot estop him from saying that the plaintiff had 
no property in them. The plaintiff took the bills under circumstances 
which gave him no right to hold them, and the defendant's omission to 
advertise will not confer that right. The finding of the jury is sufficient 
to entitle the defendant to a verdict. That the banking company could 
acquire no property in the bills, having taken them under circumstances 
in which a reasonable and cautious man would not have taken them, ia 
well established; Gill v. Cubitt, 3 B. & C. 466 j Down v. Hailing, 4 
B. & C. 330. 

Denman, C. J This case involves a mixed question of law and fact. 

The law upon the subject is not very well settled ; and I think the rule 
should be absolute, if not for entering a verdict for the plaintiff, at least 
for a new trial. I think, upon the whole, that the plaintiff is entitled 
to recover. To constitute a valid defence to the action, it was incum- 
bent on the defendant to show that the agent of the banking company 
who discounted the bills had been guilty at least of gross negligence. 
The finding of the jury does not go to anything like that extent ; nor 
was there any evidence to warrant such a finding. Then as to the other 
question, whether negligence in the loser of a bill or note will deprive 
him of a defence which he otherwise would have against the holder, that 
must depend on the circumstances of each particular case. But I 
*must say that I think the omission of the defendant here, to rtocAT 
advertise the loss of bills which had gone to the bottom of a L J 
canal; was not such negligence as to deprive him of the right of defence 



178 EOSS ON COMMERCIAL LAW. 

which he otherwise might have had. As the finding of the jury with 
respect to the plaintiff's want of caution was no answer to this action, 
and the plaintiff must ultimately recover, it might perhaps be more to 
the defendant's advantage that a rule should be made absolute for enter- 
ing a verdict for the plaintiff than for a new trial; but at all events it 
must be made absolute for a new trial. 

LiTTLEDALE, J. — It was no defence to the action that the plaintiff 
took the bill under circumstances which ought to have excited the sus- 
picion of a prudent man that it had not been fairly obtained : the defen- 
dant was bound to show that the plaintiff had been guilty of gross negli- 
gence. That was decided in Crook v. Jadis. The plaintiff is therefore 
entitled to recover. 

Taunton, J Crook v. Jadis shows that the plaintiff is entitled to 

recover, unless gross negligence has been made out. That was not found 
by the jury, and I think the negligence proved was not sufficient to have 
warranted such a finding. The other point, therefore, does not arise. 

Patteson, J The learned Judge has reserved liberty to the plain- 
tiff to move to enter a verdict, if the Court should be of opinion that the 
defendant, who is found by the jury to have been guilty of the first 
negligence by not advertising the loss of the bills, is thereby estopped 
from setting up the plaintiff's want of due caution as a defence to the 
action. We cannot, therefore, order a verdict to be entered for the 
plaintiff without deciding the point reserved by the learned Judge, 
whether or not the defendant was so estopped ; but I think it unneces- 
sary to decide that point, because I am of opinion that the first fact 
found by the jury did not amount to a defence to the action. I have 
no hesitation in saying that the doctrine first laid down in Gill v. Cubitt, 
3 B. & C. 466, and acted upon in other cases, that a party who takes a 
bill under circumstances which ought to have excited the suspicion of a 
r^npL-1-i prudent man, cannot recover, *has gone too far, and ought to be 
L -I restricted. I can perfectly understand that a party who takes a 
bill fraudulently, or under such circumstances that he must know that 
the person offering it to him has no right to it, will acquire no title ; but 
I never could understand that a party who takes the bill bon§, fide, but 
under the circumstances mentioned in Gill v. Cubitt, does not acquire a 
property in it. I think the fact found by the jury here, that the plain- 
tiff took the bills bonS, fide, but under such circumstances that a reason- 
able cautious man would not have taken them, was no defence. The 
rule must be absolute for a new trial. 

Kule absolute for a new trial. 



_ In Goodman v. Harvey, 4 A. & B. 870, Lord Denman observed, — " I be- 
lieve we are all of opinion, that gross negligence only would not be a sufficient 
answer where a party has given consideration for the bill. Gross negligence 
may be evidence of mala fides, but is not the same thing. We have shaken 
off the last remnant of the contrary doctrine." See also Uther v. Rich, 10 A. 
& B. 784. ' 



BILLS OF EXOHANQE. 179 



THE PROPERTY OF EXCHEQUER BILLS PASSES BY DELIVERY LIKE PRO- 
MISSORY NOTES AND BILLS OP EXCHANGE INDORSED IN BLANK. 

WOOKEY V. POLE. 

Michaelmas Term, 1820. — E. 4 B. & Al. 1. Eng. Com. Law Eeps. vol. 6. 

This was an action of trover for an exchequer bill, for the payment 
of £1,000, and interest. The defendants pleaded the general issue ; and 
the cause coming on to be tried at the sitting in London, after Michael- 
mas Term, 1818, before the Lord Chief Justice, a verdict was found for 
the plaintiff, subject to the opinion of the Court upon the following 
case : — 

The plaintiff was, on 1st November, 1817, proprietor and "pos- p^oKOT 
sessor of a legal and valid exchequer bill, worded and signed as >- -■ 
follows :— " No. 8333, 12 May, 1817.— By virtue of an Act of Parlia- 
ment, quinquagesimo Septimo G-eo. III. Begis, for raising the sum of 
£24,000,000 by exchequer bills, for the service of the year 1817, this 
bill entitles or order, to one thousand pounds, 

with interest after the rate of two and a half per centum per diem, pay- 
able out of the first aids or supplies to be granted the next session of 
Parliament, and this bill is to be current and pass in any of the public 
revenues, aids, taxes, or supplies, or at the receipt of exchequer at West- 
minster after the 15th day of April. Dated at the Exchequer the 12th 
day of May, 1817. If the blank is not filled up, the bill will be payable 
to bearer. 

" Grenville. 

"N.B The cheques must not be cut off." 

Early in the month of November the plaintiff sent such exchequer 
bill by his wife to Messrs. Pawsey and Eaton, who were then stock- 
brokers, carrying on business in copartnership, for the purpose of being 
sold, and the wife delivered it to them, with orders to sell it for the 
plaintiff, and to invest the proceeds of such sale in five per cent, stock, 
in the plaintiff's name. They, however, did not sell the exchequer bill 
as they were directed, nor did they buy any stock for the plaintiff, but 
took the bills so delivered to them to the defendants, (who carry on 
business in partnership as bankers, and with whom Pawsey and Eaton 
had a banking account,) deposited it with them, the same still continuing 
in blank as to the name of any payee, and in consequence of such de- 
posit, got them to place to the credit of their banking account a sum of 
iSSOO on the 7th November afterwards, and another sum of £200 on the 
8th of the same month, before the defendants had any knowledge of the 
circumstances or terms upon which Pawsey and Eaton held the same 
bill ; but the defendants did not place the exchequer bill to the credit of 
Pawsey and Eaton. The latter afterwards, at various times, paid in to 
the credit of their banking account with the defendants, moneys amount- 
ing to £300 and upwards, and also drew moneys out at various times; 
and on the 27th January, 1818, they had drawn out of defendants' hands 



ISO ROSS ON COMMEBOIAti LAW. 



[*253-| 



all the funds to their credit within £iQ 10s., and the *balanee 
still remains unsettled. The plaintiff, as soon as he was informed 
of this misconduct of Pawsey and Eaton, being the 14th January, 1818, 
applied to the defendants, explained the facts, and required to have the 
exchequer bill in question delivered up to him ; but the defendants re- 
fused to deliver it up to the plaintiff, saying they had advanced money 
to Pawsey and Eaton on its security. The defendants afterwards, on the 
27th January aforesaid, sold the said bill on their own account, and re- 
ceived the proceeds. 

The case was argued in last Easter Term by 

Sir W. Owen for the Plainliiff. — The question in this case is, Whether 
an exchequer bill is to be considered as money or goods ? If it be of the 
latter description, it may be followed into the hands of a third person, 
unless it be transferred by the owner or under his authortity, or by sale 
in market-overt. In the case indeed of money, bank-notes, or bills of 
exchange indorsed in blank, it has been held that trover will not lie 
against a third person, coming bonH fide into possession, and giving value j 
and the reason assigned for this is, because they are the circulation of 
the country, which would be impeded if pursued. They have a fixed 
value J mosey by royal proclamation, and notes and bills as the repre- 
sentatives of money ; but exchequer bills constitute no part of the cur- 
rency of the country, nor are they negotiable instruments. The exche- 
quer bills are made for large sums, none under fSlOO, and so not adapted 
for the purposes of currency. They are issued under Acts of Parlia- 
ment, passed since the Bevolution, and called in at certain times and paid 
off. All exchequer bills of late years have been issued under various 
regulations, made by the 48 Geo. III., c. 1, which have been recognized 
by the subsequent Acts, and, among others, by the 57 Geo. III., c. 2, 
under which this bill issued. Exchequer bills are sold in market-overt 
as stock, varying in its value, being sometimes at a premium and at others 
at a discount. In Nightingale Assignees v. Bevisme, it was decided that 
Stock could not be considered as money ; and in Ford v. Hopkins, which 
was an action for lottery tickets. Holt, C. J., said, " That if bank notes, 
exchequer notes, or million-tickets are stolen or lost, the owner has such 
r*9'i4T ^^ *ii'terest or property in them, as to bring an action into what- 
L -I soever hands they are come." Lord Mansfield, indeed, in Miller 
V. Eace, considers the report in Ford v. Hopkins as incorrect in making 
Lord Holt speak of bank notes, exchequer notes, and lottery tickets, as 
like to each other ; but what Lord Mansfield says as to lottery tickets is 
applicable to exchequer bills ; he says, " No two things can be more un- 
like than a lottery ticket and a bank note : lottery tickets are identical 
and specific. Specific actions lie for them. They may prove extremely 
unequal in value ; one may be a prize another a blank. Land is not more 
specific than lottery tickets are. A bank note is constantly and univers- 
ally, both at home and abroad, treated as money, as cash ; and paid and 
received as cash ; and it is necessary for the purposes of commerce, that 
their currency should be established and secured." None of these ob- 
servations apply to exchequer bills, which, like stock, rise and fall in 
value. In Maclish v. Bkins, Say. 73, it was expressly decided that the 



BILI.SOFEX0HANOE. \ 181 

property in a navy bill, which was payable to plaintiff and his assigns, 
would not pass without assignment. The period of the transaction in 
this case is material; for it takes place between November, 1817, and 
January, 1818, and this bill was not to be taken in payment for taxes 
till the 5th April, 1818. Till that time, therefore, it could not be con- 
sidered as cash. Secondly, If an exchequer bill is to be considered in 
the nature of goods, then the stock-broker was an agent for selling the 
exchequer bill, and investing the amount in 5 per cent, stock, and an 
agent employed in a specific act cannot bind his employer unless his au- 
thority bo strictly pursued. Fenn v. Harrison, 3 T. K. 757, Paterson v. 
Tash, 2 Strange, 1178, Newsom v. Thornton, 6 East, 17, Daubeney v. 
Duval, 5 T. R. 604, De Bouchot v. Goldsmid, 5 Ves. 211. This is a 
case of pawning by the broker j but if it had been a sale by him it would 
have made no difference, Wilkinson v. King, 2 Camp. 335. 

Chitty, contra. — This is a negotiable instrument, like a bill of ex- 
change; it is transferable before it is due, and it is expressly stated, that 
if the blank be not filled up it will be paid to the bearer. Such an in- 
strument must, therefore, in its very *nature be transferable by r;|,9'c-i 
delivery ; and in Groldsmid v. Gaden, cited in Collins v. Martin, L -I 
1 Bos. & Pull. 649, it appears that the Lord Chancellor was of opinion 
that navy bills indorsed in blank passed by delivery ; and in Collins v. 
Martin it was held that the property in bills of exchange indorsed in 
blank, deposited with a banker, to be by him received when due, who 
raised money upon them by pledging them to another, passed to the 
pledgee, and that the banker having afterwards become bankrupt the real 
owner could not recover the value. These authorities are expressly in 
point; for it is impossible to distinguish an exchequer bill, in which the 
blank is not filled up, from a bill of exchange, or a navy bill indorsed in 
blank. Gwr. ad. vult. 

The case stood over until this Term, when there being a difference of 
opinion on the Bench, the Judges delivered their opinions seriatim. 

Best, J. — The question which the Court is called on to decide is, 
Whether exchequer bills are to be considered as goods, or as the repre- 
sentatives of money ? and, as such, subject to the same rules as to the 
transfer of the property in them as are applicable to money. The deli- 
very of goods by a person who is not the owner (except in a manner au- 
thorized by the owner) does not transfer the right to such goods; but it 
has been long settled, that the right to money is inseparable from the 
possession of it. I conceive that the representative of money, which is 
made transferable by delivery only, must be subject to the same rules as 
the money which it represents. It was said by the Court, in Higgs v. 
Holiday, Cro. Eliz. 746, " that where the owner of money had lost pos- 
session of it, he had lost the property in it because it cannot be known ;" 
and Lord Holt, recognizing this doctrine in the case of Ford and Hopr 
kins, Salk. 283, adds, " but if bank notes, exchequer notes, million-tickets, 
or the like are stolen or lost, the owner has such an interest in them as 
to bring an action into whatsoever hands they are come." It is not be- 
cause the loser cannot *know his money again that he cannot re- r^osg-i 
cover it from a person who has fairly obtained the possession of L -> 



182 BOSS ON OOMMEROIAL lAW. 

it; for if his guineas or shillings had some private marks on them by 
which he could prove they had been his, he could not get them back from 
a bona fide holder. The true reason of this rule is, that by the use of 
money the interchange of all other property is most readily accomplished. 
To fit it for its purpose the stamp denotes its value, and possession alone 
must decide to whom it belongs. If this be correct as to money, it must 
be so as to what is made to represent money, and Lord Holt has himself 
so decided. In an anonymous case, Salk. 126, he held that trover would 
not lie by one who had lost a bill of exchange against one who had given 
for it a valuable consideration. The same judgment was given in the case 
of a lost bank note, in Miller v. Kace, 1 Burr. 452. It cannot be dis- 
puted but that this exchequer bill was made to represent money, as muph 
as a bank note or bill of exchange. It was given for a debt due from 
Government ; it is payable (the blank not being filled up) to bearer, and 
transferable by delivery ; and is on its face made current, and to pass in 
any of the public revenues, or at the receipt of the exchequer. But it 
has been said, these bills are not used as negotiable instruments, as bank 
bills and bills of exchange are ; but are the objects of sale. I do not 
see why they should not be used as negotiable instruments : they are 
transferred with the same facility as other bills ; and I know from the 
legislature that they may be used in payments,- for the Statutes direct 
that they should be received for taxes. We also know that bills of ex- 
change are as frequently sold as they are delivered in payment. It is 
the business of bill-brokers to negotiate these sales. But the great point 
is, that they are not like goods taken on the credit of the person from 
whom you receive them, but on that of Government. The receiver never 
inquires from whom they come, further than to satisfy himself that they 
are genuine bills. Indeed, when they are in blank, he has no means of 
ascertaining from whom they come. How could the defendants in this 
case find out that this bill had ever belonged to the plaintiff? It is the 
plaintiff's own negligence in not filling up the blank, that has rendered 
r*2'i71 ^^ impossible for the defendants to ascertain that *he had any 
L -I right to it ; and it would, therefore, be inconsistent with law and 
justice that, under such circumstances, he should be allowed to call on 
them to make good the loss that has arisen from the fraud of his agent. 
It seems to be the opinion of Lord Chief Justice Lee, who pronounced 
the judgment of the Court of King's Bench in Hartop v. Hoare, 3 Atkyns, 
50, that there is no difference between money, bank notes, and exchequer 
bills. His lordship observes, that Lord Holt had decided in Ford v. Hop- 
kins, " That if money is stolen and paid to another, the owner can have 
no remedy against him that received it j but if bank notes, exchequer 
bills, or million tickets, or the like, are stolen or lost, the owner has such 
an interest or property in them as to bring an action into whatever hands 
they come." Lord C. J. Lee says, " This must mean that the owner 
can bring an action into whatever hands they come, without a valuable 
consideration paid for them; for if it be not thus understood, what Lord 
Holt says here will not agree with his former opinion." This also gives 
me the authority of Lord Holt for saying that there is no difference be- 
tween bank notes and exchequer notes ; and the same learned Judge has 



BILLS OF EXOHANQE. l8S 

decided that bills of exchange pass as money. Should the deposit of this 
bill with the defendants, under the circumstances in which it was depo- 
sited, be considered as pledging the bill, that circumstance will make no 
difference if the property in the bill passes by delivery. In Collins and 
Martin, 1 Bos. & Pull. 648, a banker pledged bills, indorsed in blank, which 
had been deposited with him by a customer. The banker had no author- 
ity from the owner to part with these bills ; but the Court held, that with 
respect to bills of exchange indorsed in blank, property and possession 
are inseparable. The pawnee had a right to detain the bills until the sum 
raised on them by the bankers was paid. On these grounds, I think 
that a nonsuit should be entered in this case. 

HoLROYD, J. — It has been long and fully settled that bank-notes or 
bills, drafts on bankers' bills of exchange, or promissory notes, either 
payable to order and indorsed in blank, or payable to bearer, when taken 
bonS, fide, and for a valuable consideration, pass by delivery, and vest a 
right thereto in the transferee, without regard to the title or want of title 
in the "person transfering them. This was decided, as to a bank- rMHifn 
note, in the case of Miller v. Race, 1 Burr. 452, as to a draft on L J 
a banker in Grant v. Vaughan, 3 Burr. 1516, and as to a bill of ex- 
change indorsed in blank, in Peacock v. Rhodes, Doug. 636. Those 
cases have proceeded on the nature and effects of the instruments, which 
have been considered as distinguishable from goods. In the case of 
goods, the property, except in market-overt, can only be transferred by 
the owner, or some person having either an express or implied authority 
from him j and no one can, by his contract or delivery, transfer more 
than his own right, or the right of him under whose authority he acts. 
But the Courts have considered these instruments, either promises or 
orders for the payment of money, or instruments entitling the holder to 
a sura of money, as being appendages to money, and following the nature 
of their principal. In the one case they are payable to the person, who- 
ever he may be, who is the bearer or holder of the instrument j and so 
lalso in the other case, unless the payment is restrained by a special in- 
dorsement. In Peacock v. Rhodes, Douglas, 686, Lord Mansfield says, 
" The holder of a bill of exchange, or promissory note, is not to be con- 
sidered in the light of an assignee of the payee. An assignee must take 
the thing assigned, subject to all the equity to which the original party 
was subject. If this rule applied to bills and promissory notes, it would 
stop their currency ?" Again, he says, " I see no difference between a 
note indorsed in blank, and one payable to bearer." And in Miller v. 
Race, speaking of bank-notes, he says, " They are not goods, nor securi- 
ties, nor documents for debts, nor are so esteemed, but are so treated as 
money, as cash in the ordinary course and transaction of business, by the 
general consent of mankind, which gives them the credit and currency of 
money, to all intents and purposes : they are as much money as guineas 
themselves are, or any other current coin that is used in common pay- 
ments, as money or cash." These authorities show, that not only money 
itself may pass, and the right to it may arise by currency alone, but 
further, that these mercantile instruments, which entitle the bearer of 
them to money, may also pass, and the right to them may arise, in the 



184 ROSS ON OOMMBaOIAl LAW. 

like manner, by currency or delivery. These *decisions proceed 
L J upon the nature of the property (viz., money) to which sucU 
instruments give the right, and which is itself current ; and the effect of 
the instruments, which, either give to their holders, merely as such, the 
right to receive the money, or specify them as the persons entitled to re- 
ceive it. The question then is. Whether these principles apply to the 
present case, or whether this exchequer bill, and the right thereto, follow 
the nature of goods, which, except in market-overt, can only be trans^ 
ferred by the owner, or under his authority ? In order to ascertain that, 
we must consider the nature and effect of the instrument, both as to the 
property which it concerns, and as to its negotiability, or currency by 
law. In its original state it purports to entitle the holder to the sum of 
£1000 and interest; and the original' holder may, if he pleases, secure 
it to himself; but it is payable to the bearer, until some name is insert- 
ed, and when that is done it becomes payable to such nominee, or his 
order. But if the original holder parts with it, or keeps it in blank, he 
by that very act, or by his negligence if he loses it, authorizes the 
bearer, whoever he may be to receive the money ; and so, if he were to 
insert his own name, but indorse it in blank, instead of restraining its 
negotiability, either by not indorsing it at all, or by making a special 
indorsement, he thereby authorizes and empowers any person, who may 
be the holder boni fide and for value to receive it ; and he cannot revoke 
that authority, when it has become coupled with an interest. The in- 
strument is created by the Statute 48 Geo. III. c. 1, and is thereby 
made negotiable and current. By section 2,' the Commissioners of the 
Treasury are to make out exchequer bills, in such manner and form aa 
they shall direct ; and, after certain things are done, to put them into 
circulation. By section 5, they may be paid in to the receivers of taxes ; 
and, in section 13, are these words ; — « And for the better supporting 
the currency of the said exchequer bills, and to the end a sufficient pro- 
vision may be made for circulating and exchanging the same for ready 
money, during such time as they or any of them are to be current, the 
Commissioners of the Treasury are empowered to contract with persons 
who will undertake to circulate and exchange them' for ready money ;" 
r*2601 ^^^' ^y section 18, " on *proof as therein specified, if any ex- 
L -I chequer bill is lost, burnt, or destroyed, and on a certificate 
obtained, as therein mentioned, the Commissioners of the Treasury are 
authorized to pay the money, as if the bill had been brought in to be paid 
off, provided the payee gives security to pay into the exchequer, for the 
use of the public, so much as shall be paid him, if the exchequer bill 
shall be afterwards produced." An exchequer bill is therefore, an instru- 
ment for the repayment of money originally advanced to the public, pur- 
porting thereby to entitle the bearer to receive the money, put into cir- 
culation, and made current by law. It is not therefore like goods sale- 
able only in market-overt, and not otherwise transferable, except by the 
owner, or under his authority, but is, in all those several respects, similar 
to bills of exchange or promissory notes, and transferable in the same 
manner as they are. The case, therefore, stands thus : This exchequer 
bill was a current and negotiable instrument for the payment of money. 



BILLS OP EXCHANGE. 185 

Now money passes from one person to another by reason of its currency; 
and for that reason only, and not because it has no ear-mark, it cannot 
be recovered from the person to whom it has passed. The exchequer 
bill, therefore, seems to me, upon the same principle, to follow the na- 
ture of the money for which it is a security. The case of Maclish v. 
Ekins, Sayer, 73, has been cited, to which this is said to bear a resem- 
blance. That case is very distinguishable from the present. It was 
the case of a navy bill, payable to the plaintiff or his assignee, and not 
to bearer. By the very terms, therefore, of that instrument, the holder 
was not entitled to receive the money ; and the question in that case went 
upon the ground of the want of an assignment; and there, too, the defen- 
dant received the navy bill under circumstances which showed that he 
doubted the broker's authority to dispose of it. Here the brokers had a 
distinct authority to sell, and they might have sold the exchequer bill to 
the defendants as their own; and this is like the case of a bill indorsed 
in blank, payable to bearer, where the right arises from the instrument 
itself, and it is not necessary to deduce the title through the intermediate 
holders ; and in that case Collins v. Martin, 1 Bos. & Pull. 648, is a 
distinct authority to show, that if the party with whom such bills are 
deposited, *raise money upon them by pledging them with A., rufOfjiT 
the owner cannot afterwards maintain trover for them; and the L J 
authority of that decision was confirmed in Truettel v. Barandon, 1 B. 
Moore, 543. Now, if it be clear that this exchequer bill follows the 
nature of bills of exchange payable to bearer, these authorities are ex- 
pressly in point to show, that the brokers might pledge this exchequer 
bill, and by the delivery of it transfer the property in it to the defen- 
dants. Upon these grounds it seems to me that there ought to be judg- 
ment of nonsuit. 

Batlet, J This was an action of trover for an exchequer bill. The 

bill was dated the 12th May, 1817, and purported to be payable out of 
the first aids to be granted the then next session of parliament, and to 
be current in any of the public revenues and taxes after the 5th April. 
The form of the bill was, " This bill entitles or order, to £1000, 

with interest at 2id. per day," and it had a memorandum at the foot, 
that if the blank were not filled up, it would be paid to bearer. This 
bill belonged to the plaintiff, and early in November, 1817, he sent it to 
Pawsey and Eaton, stockbrokers, that they might sell it on his account, 
and invest the amount in his name in five per cent, stock. They did 
not sell the bill or buy the stock, but deposited it with the defendants, 
who were their bankers, and the defendants, upon the faith of such de- 
posit, carried to the credit of Pawsey and Eaton £800 on the 7th, and 
£200 more on the 8th November. On the 27th January, 1818, Pawsey 
and Eaton had exhausted these sums, and £300 more, to within £46 
10s., and their balance with the defendants still remains unsettled ; and 
the question is. Whether this wrongful deposit by Pawsey and Eaton 
will give the defendants a right to withhold the bill against the plaintiff, 
the right owner ? Had Pawsey and Eaton sold the bill to the defend- 
ants in the usual and ordinary course of dealing, there can be no doubt 
that they would have had good title to the bill, because Pawsey and 



186 ROSS ON OOMMEROIAL LAW. 

Eaton would have been acting within the scope and limits of the autho- 
rity conferred upon them by the plaintiff, which was an authority to sell. 
The neglect of Pawsey and Eaton to apply the money to the purpose 
prescribed, would not have invalidated the defendants' title, unless 
r*2B21 *''^®y ^^ ^®°* themselves to the fraud of Pawsey and Eaton, 
L -^ -I because the sale of the bill was to precede the purchase of the 
stock, and to be an independent transaction ; and had Pawsey and Eaton 
sold the bill, the plaintiff, who trusted them with the application of the 
money, must have borne the loss if they misapplied it. But though 
Pawsey and Eaton could have conferred a good title by sale, because 
they were authorized by the plaintiff to sell, the question is. Could they 
confer a good title by deposit ? A pawnee of goods or chattels, or a ven- 
dee out of market-overt, has in general no better title than his pawner 
or vendor, and canpot resist the claim of the rightful owner ; but bank- 
notes and bills of exchange stand upon a different footing in this respect 
from ordinary goods and chattels. The holder, bona fide, and for a valu- 
able consideration, of a bank-note or bill of exchange, has a good title 
against all the world ; because, in the case of bank-notes, they are con- 
sidered as money, and pass as such, and it is essential for the purposes 
of trade that delivery should give a perfect title, and because in the case 
of bills of exchange, this is the law and custom of merchants ; and it 
makes no difference in case of bank-notes or bills of exchange, whether 
such holder has received them as pawnee or otherwise, Collins v. Martin, 
1 Bos. & Pull. 648. The question here is, Whether such a bill as 
this is to stand upon the footing of bank-notes or bills of exchange, or 
upon that of ordinary goods and chattels ? and it seems to me that it 
stands upon the footing of ordinary goods and chattels, not upon that of 
bank-notes or bills of exchange. The holder of a bank-note or bill has, 
in general, no muniment to show his title; the holder of an exchequer 
bill generally has the broker's note, stating the fact and particulars of 
the purchase. If the holder buys of the Grovernment broker, he gives 
him a broker's note ; if he buys of another broker, that broker generally 
does the same. The only case in which he does not buy of a broker or 
get a broker's note, is where he exchanges at the Exchequer an old bill 
for a new one ; but then he will retain the note for the bill he gave up 
in exchange. In this case, therefore, had the defendants asked Pawsey 
and Eaton for their broker's note, they would have found they had no 
P„„„o-i title; Bank-notes and bills of exchange are passed from hand *to 
L -I hand, from one proprietor to another! in all parts of the king- 
dom, and are used as the media of commercial payments. The sale of 
exchequer bills is confined, almost exclusively, to London, and to one 
particular part of London, the Stock Exchange. That, as I apprehend, 
is the market-overt for sale of such bills ; and a sale there will, I take 
it, give the same security to the buyer which other sales in market-overt 
give. There is no market-overt for bank-notes and ordinary bills of ex- 
change, and they therefore require a protection which exchequer bills do 
not. Considering exchequer bills, therefore, as differently circumstanced 
from bank-notes and bills of exchange, and upon the same footing as 
other saleable goods and chattels, it follows that a pawnee thereof will 



BILLS or EXOHANQE. 187 

not have a better title than the pawner. The cases to this effect are 
many, and not disputed. And even if this were not the case in general, 
I think it would be so under the circumstances of this case. Pawsey 
and Eaton were stockholders ; the defendants knew that they were so ; it 
is part of the business of stockholders to sell exchequer bills for others, 
and when they offered this deposit, the defendants should have inquired 
in what character they held this bill, whether as owners or as agents, 
and the result of the inquiry might have been a discovery of the truth. 
It was urged in argument that by filling up the blank in the bill, and 
making a proper indorsement on the bill, the plaintiff might have pre- 
vented the fraud upon the defendants ; and no doubt he might if be had 
inserted his own name in the blank, and had indorsed it, "to the vendee 
of Pawsey and Eaton," but it does not follow, because he might have 
prevented fraud by these means, that he is to bear the loss for not hav- 
ing used them. Had such indorsement been used, the neglect to take 
the ordinary precaution might have thrown the loss on the plaintiff; but 
to make him bear the loss, it should be shown that that is a common 
precaution. I think no stress can be laid upon the memorandum on the 
bill, "if the blank is not filled up the bill will be paid to bearer j" that 
does not imply that a bona fide bearer shall have a right against the 
proper owner, but that payment, under such circumstances, to the bearer 
should discharge Government. I lay no stress upon Maclish v. Ekins, 
Say. 73, because there the bill was payable *to plaintiff or his r^ofj j-i 
assigns, and the plaintiff had never indorsed or assigned it, or L J 
authorized an assignment. In Goldsmyd v. Gaden, I Bos. & Pull. 
649, the broker had bought the navy bills and scrip, as agents for the 
defendants, and they left the navy bills and scrip in his possession ; so 
that he had all the muniments of title, and common inquiry would not 
have detected his want of title, and it was from want of proper caution, 
viz., the taking of the possession of the muniments from him, that he 
was enabled to impose upon the plaintiffs. Upon the whole, on the 
ground that exchequer bills are not bills of exchange ; that it is not ne- 
cessary for the purposes of trade that they should stand on the same 
footing as bills of exchange ; that in the case of exchequer bills, there 
are muniments of title, which will show in whom the title is j and that 
the defendants were guilty of negligence in not ascertaining whether 
Pawsey and Eaton had the proper muniments of title, — I am of opinion 
that they have no right to these bills, and that the plaintiff is entitled to 
recover. 

Abbott, C. J. — I am of opinion that a nonsuit ought to be entered. 
The question in the present case is. Whether the transfer of the property 
in an exchequer bill is to be governed by those rules which regulate the 
transfer of property in bank-notes and bills of exchange, originally made 
payable to the bearer, or become so payable by the effect of an indorse- 
ment according to the custom of merchants ; or by those rules which 
regulate the transfer of the property in goods and chattels ? If by the 
former, the authorities are clearly against the plaintiff; if by the latter, 
they are as clearly with him. Upon this question my mind has fluctu- 
ated; but I am ultimately of opinion, that the transfer is to be go- 



188 ROSS ON COMMEROIAL LAW. 

verned by those rules whicTi apply to notes and bills of exchange. I 
do not rely upon the case of G-oldsmyd v. Gaden, cited in Bos. & 
Pull. 649, because the facts of that case are not given with such 
fulness and perspicuity to enable me to judge of the ground and 
principle of the decision. But, abstracted from authority, I think this 
instrument is of the same nature as notes and bills of exchange. 
Like them, it is neither valuable nor useful in itself, as goods and 
chattels, such as a horse, a book, a picture, or a pipe of wine are ; it is 
r*26'51 *'^^1'*^^1^ °°^y ^8 entitling the holder to receive, at some future 
L J time, a certain sum of money, which is a value precisely of the 
same nature as the value of a note or bill. Notes and bills have been 
distinguished from goods in regard to their transfer, for the convenience 
of trade and commerce, and in regard to their being mercantile and com- 
mercial instruments, and by law negotiable. It may be true, that exche- 
quer bills are not so frequently negotiated, in fact, as some other bills or 
notes ; but I think we are to regard the negotiability of the instrument, 
and not the frequency of actual negotiation ; exchequer bills are not made 
for very small sums, and on that account alone they would not become 
the subject of frequent actual negotiation. A bank note for J5000 
passes through very few hands j a bank note for £b usually passes 
through a great number. Many country bank notes have no ordinary 
circulation beyond a very narrow district. Bills of exchange usually pass 
through very few hands ; but the character of these instruments is in no 
degree affected by those circumstances. In the case of Grant v. Vaughan, 
3 Burr. 1526, which arose upon a draft on a banker, payable to the ship 
Fortune or bearer, the Court held that it ought not to have been left to 
the jury to say whether such drafts were in fact and practice negotiable, 
for that the question whether a bill or note be negotiable or not is a ques- 
tion of law. And upon such a question of law, regarding an exchequer 
bill, I should, looking at the form of the instrument, and observing that 
the money is to be payable to the bearer, answer, that it is by law nego- 
tiable. I believe, also,, that exchequer bills are in fact negotiated in like 
manner as other bills or notes, though not to the same extent, or among 
all people generally, but confined chiefly to those who deal in money. 
And I have already said, that I think the frequency or extent of actual 
negotiation is not to be regarded. It was objected, however, at the bar, 
that there are words which show that this instrument was not to be nego- 
tiable before the fifth of April, which day had not arrived when it was 
deposited with the defendants. But I think the words have no such 
import. They are affirmative that the bill will be received as a payment 
at the Exchequer after the fifth of April, which may reasonably lead to 
P2661 ^ ^°°°1"S'°'* ^^ ^^^ negative, that it will not be received *in pay- 
L -I ment there before that day. But compulsion to receive an in- 
strument in payment is not by any means requisite to give to it the 
character of a negotiable instrument. No man is compellable to take a 
bill of exchange in payment. It was also abjected, that exchequer bills 
are the subject of sale, and usually are transferred by sale. , This is true 
in fact, but I think the fact does not affect the character of the instrument ; 
for bills of exchange also are often made the subject of sale, and are 



BILLS or EXCHANGE. 189 

actually transferred by sale. For these reasons I am of opinion that ex- 
chequer bills are negotiable, and may be transferred in the same manner 
as bills of exchange ; and that in those bills, as in bills of exchange, the 
property passes with the possession by every mode of transfer, fraud and 
collusion apart. And I think this opinion is most consonant to public 
policy, which requires the utmost facility of transfer, because the value 
is in some degree increased thereby; though I should not think myself 
justified in deciding the case upon the ground of public policy alone. It 
will be understood that I have been speaking of exchequer bills in which 
the blank is not filled up with any name, and which, therefore, according 
to the note at the foot, are to be paid to the bearer. 

Judgment of nonsuit. 



THE INDOKSER OP A BILL OP EXCHANGE STANDS IN THE RELATION OP A 
NEW DRAWEE, AND IS AFFECTED WITH ALL THE LIABILITIES OP THE 
ORIGINAL DRAWER. 

I. — HEYLYN V. ADAMSON. 

Not. 20, 1158.— E. 2 Burr. 669. 
This was an action on the case, upon promises. And the first count 
in the declaration was upon an inland bill of exchange, drawn by Kobert 
Carrick and directed to William Dods, dated the 13th day of March, 
1756; whereby, the said Kobert Carrick required the said William Dods 
to pay to the defendant or his order £100, at 40 days after date, value 
received, as advised by the said Kobert Carrick: which said *bill i-^oo^-i 
was indorsed by the said defendant (Eleanor Adamson) to the <- J 
said plaintiffs, and was accepted by the said Dods, but not paid by him. 
Upon the trial of this cause, before Lord Mansfield, at the sittings 
after the last Hilary Term at Gruildhall, it was proved on the part of the 
plaintiffs, that the said Kobert Carrick made the bill, and that the defen- 
dant indorsed it to the plaintiffs, and that the said William Dods accepted 
it, but afterwards refused payment ; and that the plaintiffs thereupon, on 
the day it became payable, carried it to be protested for the non-payment, 
and soon afterwards brought their action thereon against the defendant : 
but it did not appear, on the trial, that the drawer of the bill had any 
notice of such non-payment, or that any demand of the money was ever 
made on him before the commencement of the suit. 

It was thereupon objected by the defendant's counsel, " that the action 
would not lie against the defendant, (the indorser,) until a demand of 
payment had been made upon the drawer ;" and as no such demand was 
proved to have been made on the drawer, the plaintiffs ought therefore 
to be nonsuited. 

Lord Mansfield directed a verdict to be given upon the said first 
count for the plaintiffs, for £100 damages and 40 shillings costs, subject 
to the opinion of the Court, " Whether upon this case the plaintiffs were 
entitled to recover ?" 

A case was accordingly stated for the opinion of the Court, and signed 

Mat, 1854.— 13 



190 BOSS ON COMMEEOIAL LAW. 

by Sir Richard Lhyd for the plaintiffs, and by Mr. Norton for the de- 
fendant. 

The only question was, Whether in an action brought upon an inland 
bill of exchange, by the indorsee against the indorser, this objection, 
" that no evidence was given at the trial of notice to the drawer of the 
bill, or even of making any inquiry after him," was a ground of nonsuit? 

It was argued on Tuesday last, (the 14th inst,)by Mr. Serjeant Z>at)ejr 
for the plaintiff, and Mr. Booke for the defendant. 

Serjeant Davey made a distinction between inland bills of exchange 
r*2fi81 ^^^ °°*®® °^ )ys,-aA. In the latter the drawer is to be *the payer : 
L J in the former the drawee (the acceptor of the bill) is to pay it. 
So that upon a note of hand, the drawer of the note is the first person to 
be resorted to for payment ; but upon an inland bill of exchange, the 
a,coeptor of the bill, not the drawer, is the first person to be resorted to 
for payment, (though the drawer shall indeed stand as his collateral 
security for his so doing.) Therefore cases upon promissory not esare 
not applicable to cases on inland bills of exchange. The bill holder 
can't come upon the drawer of the bill, till the person upon whom it 
is drawn shall either refuse to accept it, or refuse payment after he 
has once accepted it. 

Every indorsement of a bill of exchange is in the nature of a new bill 
of exchange ; *nd if there are several indorsers, they all undertake " that 
the drawee (the acceptor of the bill) shall pay it." 

The indorsee is a stranger to the drawer of a bill of exchange : he is 
only concerned with the acceptor. 

A bill of exchange may happen not to be dated from any certain place ; 
or it may be dated from a place where the drawer does not reside ; as 
where a traveller, calling at an inn, takes up money there, and gives a 
bill which is afterwards indorsed by his landlord. 

And it would be vastly inconvenient to all the parties, if it should be 
holden necessary for the indorsee to find out or even search for the drawer 
of an inland bill of exchange, to give him notice " that the acceptor has 
refused payment." For the security may be lost in the interim, whilst 
such search is making : the indorser may break before the indorsee may 
be able to find the drawer. But the indorser may know where to find 
him, or how to apply to him. 

Six Chief Justices have been of different opinions on this point : three 
of them of one opinion, three of another. 

The 9 & 10 Wm. III., o. 17, was the first Act that gives protests 
for non-payment of inland bills of exchange : and the 3 & 4 Anne, c. 9, 
§ 4, 5, extends the protest to the case of non-acceptance. The words of 
both these Acts are remarkable, viz., that the protest shall be notified to 
the party from whom the bill was received, who shall repay the same 
with interest and charges." 

r*SfiC) 1 *'^^^ inconvenience may be the same (as to this matter) upon 
L J an inland bill as upon a foreign bill. Yet upon a foreign bill, 
it certainly is not necessary. In 1 Strange, 441, Bromley v. Frazier, 
Tr. 7 Gr. 1, on a foreign bill of exchange, the Court, on mature delibera- 
tion, held, " that a demand upon the drawer is not necessary to make a 



BILLS OF EXOHANQE. 191 

charge upon the indorser; hut the indorsee has liberty to resort to 
either." It was a point then unsettled. In 1 Salk. 131, 133, there 
are, as it is said in Strange, 441, contradictory opinions upon it, which 
are professedly settled hy that case of Bromley v. Frazier, as the hook 
declares ; but those contradictory opinions are upon inland bills of ex- 
change. Indeed the case of Bromley v. Frazier, (then directly under 
consideration) was upon a foreign one; but the book goes on thus, 
which is general and equally applicable to both sorts,) — " And as to the 
notion that has prevailed, ' that the indorser warrants only in default of 
the drawer,' there is no colour for it ; for every indorser is in the nature 
of a new drawer, and at nisi prius the indorsee is never put to prove the 
hand of the first drawer, where the action is against an indorser. The 
requiring a protest for non-acceptance, is not because a protest amounts 
to a demand; for it is no more than giving notice to the drawer to get 
his eflFeots out of the hands of the drawee, who, by the other's drawing, 
is supposed to have sufiScient wherewith to satisfy the bill." So that this 
notion is here exploded, " that the indorser of a bill of exchange warrants 
only in default of the drawer." But every indorser warrants against 
the default of the payer. 

In the case of Hamerton v. Mackrell, M. 10 G. 2 B. K., (which was 
subsequent to the case in 1 Strange, 441,) an action by the indorsee of a 
promissory note against the indorser, the objection was, that it was not 
alleged in the declaration, " that a demand was made upon the drawer of 
the note." And it was there holden not necessary to be alleged in the 
declaration. But Lord Harkwicke mentioned the opinions of Holt, Mac- 
clesfield, Pratt, Eaymond, Eyre, and King. Holt, Eyre, and Kaymond, 
held it to be necessary : Macclesfield, Pratt, and King, were of a contrary 
opinion, viz., " that it was not necessary." 

These opinions seem to relate only to notes of hand ; but upon a bill 
of exchange the indorsers are all only promisers and *under- r»oPTn-i 
takers for the payer (the acceptor) of the bill, and are not obliged L J 
to look after the original drawer. And fact and experience in business 
are agreeable to this position. 

Mr. Rooke, for the defendant, insisted that upon an action brought 
by the indorsee against an indorser of an inland bill of exchange, the 
plaintiff ought, at the trial, to prove notice to and demand of payment 
from the drawer of the bill. 

The indorser is only a conditional undertaker for the drawer of the 
bill, who is the first contractor : he stands as a surety only, and cannot 
be called upon unless the drawer makes default. It is like the case of prin- 
cipal and accessary, where the accessary cannot be tried before the prin- 
cipal : so here the indorser cannot be liable till the original contractor 
has failed in performing his contract. 

And great inconveniences might follow, if this was otherwise. 
There are several authorities which fully prove that it is necessary. 
Cases in B. E. Tettip. W. 3, 244, Lambert v. Oakes, at Guildhall, and 
1 Ld. Baym. 443. Lambert v. Oakes, S. C. is directly in point. 1 
Salk. 126, pi. 6 Anon, (probably S. C.) accordingly. 1 Strange, 649, 
M. 12 G. 1, Syderbottom v. Smith. Upon an action against the 



192 ROSS ON COMMERCIAL LAW. 

indorser of a promissory note, at Guildhall, C. B. Lord C. J. Eyre's 
opinion was accordingly, "That the plaintiff must prove diligence to 
get the money of the drawer, the indorser only warranting on his default." 
And for want of such proof, he directed the jury to find for the defend- 
ant. 2 Strange, 1087. Collins t. Butler, at Guildhall, per Lee, C- J. 
It was ruled accordingly ; who cited a case determined on great debate, 
in C. B. in P. 4 G. 2. Due diligence must be shown to have been used 
in inquiring after the drawer of the bill of exchange, before the money 
can be recovered against the indorser. 

And there is no difference between a note of hand and a bill of ex- 
change, other than that the drawer of the note is the express promiser, 
and (as it were) both drawer and drawee ; whereas on a bill of exchange he 
is only an implied promiser. Indeed on a foreign bill of exchange this 
notice and demand is not necessary, because the foreign drawer is not 
amenable to justice here. 

r*27n *^^ *° *^^ ^°^^^ °^ *® statutes of 9 & 10 W. III., and 3 & 4 
L J Anne, they do not exclude the necessity of giving notice to the 
drawer ; though they add an additional caution, " of giving notice to the 
person from whom the bill was received." 

Mr. Sergeant's ease, wherein mention is made of the six Chief Justices 
differing in opinion, seems to be taken from the third volume of the 
Abridgment of the Law. 

Sergeant Baviy in reply I agree that the drawer of a bill of ex- 
change is only a conditional undertaker for the drawee ; and so also is 
the indorser of a bill of exchange a conditional undertaker for the drawee. 
But it does not follow that the indorser of a bill of exchange is only a 
conditional undertaker for the drawer. 

The case of Lambert v. Oakes was upon a note of hand, (according to 
Lord Raymond,) and Lord C. J. Holt's opinion upon a bill of exchange 
was upon a case not before him. 

In the case of Hamerton v. Mackrell, Lord Hardwioke held it not 
necessary. 

The drawee's place of abode is always known upon a bill of exchange, 
but not the drawer's. 

The Court gave no opinion at the time of this argument, but post- 
poned it, in order to settle the point with precision and certainty. 

Lord Mansfield observed, That the confusion seemed to have arisen 
from its not being settled " who is the original debtor." 

Mr. Justice Denison said, The case of Hamerton v. Mackrell was 
upon a writ of error; and the judgment was affirmed, upon the allega- 
tion contained in the declaration, of a promise made by the indorser, 
which (upon a writ of error) they considered as an express promise ; but 
Lord Hardwicke did not give his own opinion at all upon what is now 
the present question. 

Cur. advis. 
r*2721 ^°^^ Mansfield now delivered the resolution of the Court. 
L J His lordship said, — He could not persuade himself that there 
had really been such a variety of opinions upon this question, sjt nisi 
prius, as had been mentioned at the bar. But however that may be, it 



BILLS OF EXCHANGE. 193 

must now be determined upon the nature of the transaction, general conve- 
nience, and the authority of deliberate resolutions in Court. 

A bill of exchange is an order or command to the drawee who has, or 
is supposed to have, eflFects of the drawer in his hands to pay. When 
the drawee has accepted, he is the original debtor ; and due diligence 
must be used in applying to him. The drawer is only liable in default 
of payment by him, due diligence having been used : and therefore if 
the acceptor is not called upon within a reasonable time after the bill is 
payable, and happens to break, the drawer is not liable at all. 

Every man therefore who takes a bill of exchange, must know where 
to call upon the drawee : and undertakes to demand the money of him. 

When that bill of exchange is indorsed by the person to whom it was 
made payable, as between the indorser and the indorsee, it is a new bill 
of exchange, and the indorser stands in the place of the drawer ; the 
indorsee undertakes to demand the money of the drawee. If he neglects 
and the drawee becomes insolvent, the loss falls upon himself. If the 
indorsee is diligent, and the drawee refuses payment, his immediate 
remedy is against the indorser ; and it was very properly observed, that 
the act of 9 & 10 Wm. III., requires notice of the protest to be given 
" to the person from whom the bill was received." He may have an- 
other remedy against the first drawer, as assignee to, and standing in 
the place of the indorser. 

The indorsee does not trust to the credit of the original drawer : he 
does not know whether such a person exists, or where he lives, or whether 
his name may have been forged. The indorser is his drawer, and the 
person to whom he originally trusted, in case the drawee should not pay 
the money. There is no diflferenoe in this respect between foreign and 
inland bills of exchange, except as to the degree of inconvenience : all 
the arguments from law, and the nature of the transaction, are exactly 
the same in both cases. 

*A8 to foreign bills of exchange, the question was solemnly r-^iiOiroT 
determined by this Court, upon very satisfactory grounds, in the L J 
case of Bromley v. Frazier. That was " an action upon the case upon 
a foreign bill of exchange, by the indorsee against the indorser ;" and 
on general demurrer it was objected, " that they had not shown a de- 
mand upon the drawer, in whose default only it is that the indorser 
warrants." And because "this was a point unsettled, and on which 
there are contradictory opinions in Salkeld, 131 and 133, the Court took 
time to consider of it. And on the second argument, they delivered 
their opinions. That the declaration was well enough ; for the design of 
the law of merchants in distinguishing these from all other contracts, by 
making them assignable, was for the convenience of commerce, that they 
might pass from hand to hand in the way of trade, in the same manner 
as if they were specie. Now to require a demand upon the drawer, will 
be laying such a clog upon these bills as will deter every body from 
taking them. The drawer lives abroad, perhaps in the Indies, where the 
indorsee has no correspondent to whom he can send the bill for a de- 
mand ; or if he could, yet the delay would be so great that nobody would 
meddle with them. Suppose it was the case of several indorsements, 



194 KOSS ON OOMMEEOIAL LAW. 

must the last indorsee travel round the world before he can fix his action 
upon the man from whom he received the bill ? In common experience, 
every body knows that the more indorsements a bill has the greater 
credit it bears : whereas if those demands are all necessary to be made, 
it must naturally diminish the value, by how much the more difficult it 
renders the calling in the money. And as to the notion that has pre- 
vailed, that the indorser warrants only in default of the drawer, there is 
no colour for it ; for every indorser is in the nature of a new drawer ; 
and at Nisi Prius, the indorsee is never put to prove the hand of the first 
drawer, where the action is against an indorser. The requiring a protest 
for non-acceptance, is not because a protest amounts to a demand; for it 
is no more than a giving notice to the drawer to get his effects out of the 
hands of the drawee, who (by the other's drawing) is supposed to have 
sufficient wherewith to satisfy the bill." Upon the jfhole, they declared 
r«2741 tlieinselves to be of opinion, " That in the case of a foreign *bill 
L J of exchange, a demand upon the drawer is not necessary to make 
a charge upon the indorser; but the indorsee has his liberty to resort to 
either for the money ; consequently the plaintiff (they said) must have 
judgment." 

Every inconvenience here suggested holds to a great degree, and every 
other argument holds equally, in the case of inland bills of exchange. 

We are therefore all of opinion, " that to entitle the indorsee of an 
inland bill of exchange to bring an action against the indorser, upon 
failure of payment of the drawee, it is not necessary to make any demand 
of, or inquiry after, the first drawer." 

The law is exactly the same, and fully settled upon the analogy of 
promissory notes to bills of exchange; which is very clear when the 
point of resemblance is once fixed. 

While a promissory note continues in its original shape of a promise 
from one man to pay to another, it bears no similitude to a bill of exchange. 
When it is indorsed the resemblance begins ; for then it is an order by 
the indorser upon the maker of the note, (his debtor by the note,) to pay 
to the indorsee. This is the very definition of a bill of exchange. 

The indorser is the drawer, the maker of the note is the acceptor, and 
the indorsee is the person to whom it is made payable. The indorser 
only undertakes in case the maker of the note does not pay. The indorsee 
is bound to apply to the maker of the note : he takes it upon that condi- 
tion ; and therefore must in all cases know who he is, and where he 
lives; and if after the note becomes payable, he is guilty of a neglect, 
and the maker becomes insolvent, he loses the money and cannot come 
upon the indorser at all. 

Therefore, before the indorsee of a promissory note brings an action 
against the indorser, he must show a demand, or due diligence to get 
the money from the maker of the note, — just as the person to whom the 
bill of exchange is made payable must show a demand, or due diligence 
to get the money from the acceptor, before he brings an action against 
the drawer. This was determined by the whole Court of Common Pleas, 
upon great consideration, in Pasch. 4 G. 2; as cited by my Lord C. J. 
Lee in the case of Collins v. Butler. 



BILLS OF XXOHANOE. 195 

•So that the rule is exactly the same upon promisBory notes rtoiTC-i 
as it is upon bills of exchange, and the confusion has in part <- J 
arisen from the maker of a promissory note being called the drawer : 
whereas, by comparison to bills of exchange, the indorser is the drawer. 

All the authorities, and particularly Lord Hardwicke, in the case of 
Hamcrton v. Mackerel, M. 10, G. 2, (according to my brother Denison's 
state of what his lordship said,) put promissory notes and inland bills of 
exchange just upon the same footing : and the statute expressly refers 
to inland bills of exchange. 

But the same law must be applied to the same reason ; to the sub- 
stantial resemblance between promissory notes and bills of exchange, 
and not to the same sound, which is equally used to describe the makers 
of both. 

My Lord C. J. Holt is quoted as being of opinion, " that in actions 
upon bills of exchange, it is necessary to prove a demand upon the 
drawer." For proof of this, the principal case referred to is that of 
Lambert v. Oakes, reported in three books : 1 Ld. Raymond, 1 Salk., 
and 12 Mod. 

In 1 Ld. Raym. 443, it appears manifestly that the question arose 
upon a promissory note. "R. signed a note under his hand, payable to 
Oakes or his order; Oakes indorsed it to Lambert, upon which Lambert 

brought the action for the money against Oakes. Per Holt, C. J He 

ought to prove that he had demanded or done his endeavour to demand 
this money of R, before he can sue Oakes upon the indorsement. The 
same law, if the bill was drawn upon any other person, payable to Oakes 
or order;" that is, "a demand must be made of the person upon whom 
the bill is drawn." And other parts of the case manifestly show this 
to have been the meaning. For my Lord C. J. Holt is reported to have 
said, " the indorsement will subject the indorser to an action ; because it 
makes a new contract, in case the person upon whom it is drawn does 
not pay it." Again, " if the indorsee does not demand the money pay- 
able by the bill, of the person upon whom it is drawn, in convenient 
time, and afterwards he fails, the indorser is not liable." 

In Salkeld the case is confounded : it is stated to be a bill of r«niT(:.-i 
♦exchange, and "that the demand must be made upon the drawer, L J 
or him upon whom it was drawn." My Lord 0. J. Holt had said that 
a demand must be made of the maker of a promissory note, (calling him 
the drawer,) and in the case of a bill of exchange, of him upon whom 
the bill is drawn. The report jumbles both together, as applied only to 
a bill of exchange ; misled, I dare Say, by the equivocal sound of the 
term drawer, and by the Chief Justice's reasoning in the case of a pro- 
missory note, from the law upon bills of exchange. 

In 12 Modern, 244, the case is mistaken too ; and stated as upon a 
bill of exchange, and as a determination " that there must be a demand 
upon the drawer of the bill of exchange :" and yet the report itself shows 
demonstrably, that what was said by my Lord C. J. Holt was applied 
to the maker of a promissory note, (calling him the drawer.) For the 
report makes him argue — "So if the bill was drawn on any other person,, 
payable to Oakes or order :" which shows that the case in judgment was 



196 EOSS ON COMMERCIAL LAW. 

not a bill drawn upon another person, but payable only to Oakes, by K. 
himself. 

; It seems to me as if Lord C. J. Holt, in that case, had considered the 
drawee of a bill of exchange in the same light as the maker of a pro- 
missory note : but loose and hasty notes, misled by identity of sound, 
have misapplied what was said of the drawer of a promissory note to 
the drawer of a bill of exchange; and to such a degree misapplied it, 
that two reports out of the three have stated the question as arising upon 
a bill of exchange; which is manifestly otherwise. 

But be this conjecture as it may, we are all of opinion, " that in 
actions upon inland bills of exchange, by an indorsee against an indorser, 
the plaintiff must prove a demand of, or due diligence to get the money 
from the drawee (or acceptor;) but need not prove any demand of the 
drawer: and that in actions upon promissory notes, by an indorsee 
against the indorser, the plaintiff must prove a demand ofj or due dili- 
gence to get the money from the maker of the note." 

Accordingly, the Rule was, That the postea be delivered to the 
plaintiff. 



[*277] *IL — BALLINGALLS v. GLOSTER. 
May 4, 1803.— E. 3 East, 481. 

The plaintiffs, as indorsees of a bill of exchange, declared that one 
John Gloster on the 26th of March, 1802, at the island of St. Vincent, 
in parts beyond seas, according to the custom of merchants, drew a bill 
of exchange for £250 of that date, directed to one J. Jackson, and re- 
quired him at 90 days sight to pay the same to the order of the defen- 
dant ; that the defendant afterwards and before payment of the same 
indorsed the bill to the plaintiffs or their order. That they afterwards, 
on the 10th of AuguB,t, presented the bill for acceptance to J. Jackson, 
who refused to accept the same ; and thereupon the plaintiffs caused it 
to be duly protested for non-acceptance : of which premises the defendant 
had notice, and according io the custom of merchants became liable to 
pay to the plaintiffs the sum of money in the bill mentioned when he 
should be requested ; and being so liable he promised to pay, &c. 

The facts appearing in evidence before Lord Ellenborouqh, C. J., at 
Gruildhall, were, that the bill in question was passed to the plaintiffs' 
agent at Trinidad by the original drawer, with the indorsement of the 
defendant upon it for a valuable consideration : that the bill was pre- 
sented and protested for non-acceptance on the 10th of August; after 
which, on the 30th of October, this action was commenced before the bill 
fell due, which was not till the 11th of November. And the only ques- 
tion was, Whether upon non-acceptance of a bill the indorsee has a right 
immediatgly to sue the indorser, as a new drawer, without waiting for the 
time when the bill becomes due ? it having been decided in Milford v. 



BILLS OF EXCHANGE. 197 

Mayor, Dougl. 54, that such action lies against the original drawer. The 
plaintiffs at the trial obtained a verdict, with leave to the defendant to 
move to set it aside. A rule nisi having been accordingly obtained for 
this purpose, — 

Erskine and C. Warren, who were to have shown cause, were stopped 
by the Court. 

Gihbs and Const, in support of the rule, endeavoured to distinguish this 
*from the case of Milford v. Mayor; because of the privity p^„,_jj-. 
between the original drawer and the person on whom the bill is L J 
drawn, who is presumed to be his correspondent, having property of the 
drawer's in his hands, or at least willing to give him credit ; for whose 
due acceptance thereof the drawer may well be supposed to pledge himself 
as an inducement for a third person to take his bill instead of payment : 
there if the condition fail by the non-acceptance of the drawee, the holder 
may fairly resort to the drawer immediately. But as between indorser 
and indorsee there is no such implied understanding, the original con- 
tract between them is with relation to the time mentioned in the bill, 
before which no debt arises. 

Lord Ellenborouqh, C. J. — There is no distinguishing the case of 
an indorser from that of the drawer, it having been long ago decided that 
every indorser is in the nature of a new drawer, every indorsement as a 
new bill, and that the indorser stands as to his indorsee in the law 
merchant the same as the drawer. The point ruled in Milford v. Mayor 
was not then new. In Bright v. Furrier, Bull. N. P. 269, where the 
same quesMon occurred. Lord Mansfield said that the law was clearly 
so settled. Those indeed were actions against the drawers ; but though 
this particular case of an action against the indorser has not occurred in 
the books, yet when it has been laid down that an indorser stands in all 
respects in the same situation as a drawer, all the consequences follow 
which are attached to the situation of the latter. And in a late case tried 
before me at Guildhall, it appeared to be the universally received law 
merchant on the Continent, that an indorser was liable immediately on 
the non-acceptance of the drawee. 
Grose, J., of the same opinion. 

Lawrence, J. — In Heylyn v. Adamson, Lord Mansfield said, when a 
bill of exchange is indorsed " as between the indorser and indorsee, it is 
a new bill of exchange, and the indorser stands in the place of the 
drawer." 

*Le Blanc, J. — There is no hardship on the indorser; for he r,tc)>jn-, 
must be presumed to know the person from whom he receives L -I 
the bill, and on whose security he must rely. Rule discharged. 



the NEQOTIABrLITT OP A BILL OR NOTE MAT BE RESTRICTED BY AN IN- 
DORSEMENT IN FAVOUR OF A PARTICULAR PARTY, OR FOR A PARTICU- 
LAR PURPOSE, AND WHEN SO RESTRICTED EVERY SUBSEQUENT HOLDER 



198 ROSS ON OOMMEROIAIi LAW. 

MENOJS WILL NOT BE IMPLIED, BUT MUST BE CLEARLY AND UNE- 
QUIVOCALLY EXPRESSED. 

I. — ANCHER V. THE BANK OP ENGLAND. 
May 10, 1781.— E. 2 Doug. 637. 

One Captain Dahl, a Dane, and resident in Denmark, being indebted 
to the house of Claus Heide & Co. in London, applied to one Msestue to 
procure him a bill, in -order to discharge the debt. Maestue accordingly 
obtained a bill from the plaintiffs, at Christiana, on Claus Heide & Co., 
with whom they had a correspondence j which bill was as follows : — 
« Christiana, ifth January, 1778. Two months after sight, please to 
pay this, our sola bill of exchange, to Mr. Jens Maestue, or order, one 
hundred and twenty pounds sterling, value in account, apd place it to 
account, as per advice from— Karen, widow of Christian Ancher & Sons. 
— To Messieurs Claus Heide & Co., of London." 

On this bill was written, by Maestue, an indorsement, in the Danish 
language, of this import : — " The within must be credited to Captain 
Morten Larsden Dahl, value in account. Christiana, 17th January, 1778, 
Jens Mffistue." And it was remitted to Claus Heide & Co. in the follow- 
ing letter: — "Agreeable to the desire of Captain Morten Larsen Dahl, of 
Arendall, I have enclosed, for his account sent you, Karen Ancher & 
Sons' bill on yourselves, for £120, which you will, on receipt, be pleased 
to credit his account with, and advise him of the same." 



[*280] 



*The bill was received by Claus Heide & Co., and accepted. 



and they gave notice to the plaintiffs and to Dahl, that they had 
received it, and placed it to his account. Afterwards, a forged indorse- 
ment, in English, was written upon it as follows : — " For me, to pay 
Mr. Detleff, D. Muller, or order. Morton L. Dahl." MuUer, who was 
a clerk in the house of the acceptors, carried the bill, thus indorsed, but 
which never had been in the hands of Dahl, to the Bank, and indorsed 
it with his own name, upon which it was discounted, in the ordinary 
course of business. When the day of payment came, the acceptors haviiSg 
become insolvent, and Muller having absconded, the bill was protested; 
and one Pulgberg, as a friend or agent for the plaintiffs, came to the 
Bank, and paid it for their honour as the drawers ; but the forgery having 
been discovered, this action for money had and received was brought 
against the Bank, on the ground that the bill was not .negotiable on 
account of the special indorsement, and that it had, therefore, been dis- 
counted by the Bank in their own wrong, and the money paid by Pulg- 
berg, to take it up, paid by mistake. 

The cause was tried at G-uildhall, before Lord Mansfield, at the sit- 
tings after last term, when his lordship directed a nonsuit; and it now 
came on in Court, on a motion for setting aside the nonsuit, and granting 
a new trial. 

The Attorney- GeneraUoT the defendants. — The Bamkis perfectly inno- 
cent of any fraud. The, bill was in their hands for a valuable considera- 
tion. The drawers, by bringing this action, adop« the payment by 
Pidgberg, and make Mm theii Sygent, and when a dtawer pays a bill, it 



BILLS OF EXOHANGi:. 199 

becomes a matter of account between him and the acceptor, and all the 
indorsers are diBcharged. This bill was originally drawn payable to order, 
but the particular indorsement, it is said, made it not negotiable. There 
can be no doubt, however, but that Dahl might still have indorsed and 
negotiated it. It is true, as his name is forged, he never can be called 
upon as an indorser, but his debt is discharged by the credit given him 
by Claus Heide & Co. 

* Dunning and Davenport for the Plaintiffs. — The bill was r^foci-i 
taken up by the plaintiff's agent, without authority, but it was L -I 
bonS, fide, and for the best, and therefore they have done right to indem- 
nify him. The parties are all innocent, but the Bank have been negli- 
gent, and the mistake in paying them ought to be rectified. The Attor- 
torney-General's rule, as to the discharge of indorsers, by the payment 
by the drawer, applies only where the drawer has paid with a full know- 
ledge of the circumstances. If the Bank in this case could not have 
sued the drawers, they cannot retain the money ; which brings it to the 
question, Whether a bill that has once been negotiable must always con- 
tinue so, and cannot have that quality restrained by a particular indorse- 
ment, as, " Pay to A. B., and no one else," or the like ? The constant 
practice, with regard to remittances of rents from the country, shows that 
negotiability may be restrained in that manner. Those remittances are 
made by bills payable to order, but are generally indorsed by the payee 
to his banker, without saying " or order," for the express purpose of 
stopping their negotiability. If a bill gets to the drawee, its negotiability 
ceases. This had been in the hands of the drawees. Notice was given 
by them to the plaintiffs, that they had received it, and to Dahl, that 
they had applied it to the discharge of his debt. 

Lord Mansfield. — The ground of the nonsuit was, that the purpose 
for which the bill was drawn was answered, it having been applied 
to the credit of Dahl, and he having acquiesced. It therefore occur- 
red to me that the drawers had received no injury, and had no interest. 
But (which was not attended to at the trial) there has been a second pay- 
ment, for the honour of the plaintiffs, and it is contended that a consi- 
deration has arisen on that second payment. Where there is equal 
equity, possession must prevail ; and the equity is equal between per- 
sons who have been equally innocent and equally diligent. The ques- 
tion, therefore, is. Whether the Bank has been equally diligent ? A bill, 
though once qegotiable, is certainly capable of being restrained. I re- 
member this being determined upon argument. A blank indorsement 
makes the bill payable to bearer, but, by a special indorsement, the 
holder may stop the *negotiability. Maestue did so here. It r»oQoT 
does not seem to me that, after the special indorsement of Mses- <- J 
tue, Dahl himself oould have indorsed it over. MaBstue did not mean to 
make himself answerable as an indorser, or to enable Dahl to raise money 
on the bill. The Bank could not have maintained an action on the bill 
against the plaintiffs. It was their negligence not to read the special 
iadorsement. 

WiLLES, Justice. — I am of the same opinion. The question is, 
Whether the negotiability is not restrained by the indorsement ? and I 



200 KOSS ON OOMMEEOIAL LAW. 

think it is. The Bank either did read, or ought to have read, the in- 
dorsement. The only doubt is, what should be the effect of the bill's 
having been taken up by a third person ; but I think he must be taken 
to be the agent of the plaintiffs. 

AsHHUEST, Justice. — I am of the same opinion. The question ds, 
Did the Bank use due diligence ? If they had attended to the indorse- 
ment, they would not have discounted the bill. I think Dahl himself 
could not have indorsed it. It was never the intention that Claus Heide 
& Co. should pay money to Dahl, but only that the amount should be 
set off in his account. If the Bank have taken a bill not negotiable, it 
is their own fault, and they are not entitled to retain the money which 
has been paid them by mistake. 

BuLLER, Justice. — I have the misfortune to differ from the rest of the 
Court. As to the forgery, it was decided in the case of Price v. Neale, 
3 Burr. 1355, in this Court, that if a forged bill has been taken up, the 
money shall not be recovered back from the innocent indorsee. There- 
fore, as against such an indorsee, the forgery is not material. As to the 
indorsement by Maestue, it amounts to an indorsement to Dahl, and 
makes him the proprietor; and the bill being originally negotiable, it 
seems to me to have continued so. What is called a restrained indorse- 
ment, viz., that the bill was to be credited to Dahl, appears to amount 
to the same thing as " Pay to Dahl." The words " or order," are omit- 
ted, but it has been determined, that such omission does not stop the 
r*989l negotiability of a *bill. The circumstance that there was an ac- 
L J count between Dahl and the drawers, cannot affect third persons 
who knew nothing of that account. But if the bill was only meant to 
pay the drawees, why was it not cancelled by them when they received 
it ? Why did they accept it ? Did not that hold out negotiability to 
the rest of the world ? This is an answer to any supposed negligence in 
the defendants. Besides, if the bill was not meant to be negotiable, why 
did the defendants take it up ? That was done by another person, it is 
said, for their honour; but they have, by bringing the action, adopted 
his act. 

Lord Mansfield. — The whole turns on the question. Whether the 
bill continued negotiable? As the case stands at present, let the non- 
suit be set aside, but we will consider of it farther, and if we alter our 
opinions we will mention it. 

The case was never mentioned any farther. 

The rule made absolute. 



II.— TEBUTTEL v. BARANDON. 

Not. 27, 1817.— B. 8 Taunt. 100. Eng. Com. Law Beps. vol. 4. 

Trover to recover the value of two bills of exchange ; one drawn by 

Garton upon, and accepted by Speare, payable to Garten's order eight 

months after date, and indorsed "Pay to J. P. De Roure, Esq., or order, 

for account of Messrs. Treuttel & Wurtz;" the other drawn by Ores- 



BILLS or EX.OHANOE. 201 

■wick upon, and accepted by Speare, payable to Creswick's order, nine 
mouths after date, and with a similar indorsement. 

At the trial of the cause before Gibbs, C. J., at the London sittings 
after last term, it appeared, that the bills had been deposited with the 
defendants by De Koure and Co., the agents of the plaintiiFs, but with- 
out their authority, as security for cash advances made by defendants to 
De Koure and Co. De Roure, who had become bankrupt, stated, that he 
received the bills for the plaintiffs, whose agent he was, and indorsed 
them *to the defendants, to whom he gave them as a security r-fnoA-i 
on his own account ; that, when the bills were deposited, he was <- J 
indebted to the defendants beyond the amount of such bills ; and that 
the defendants continued afterwards to advance money to him on the 
bills so deposited. It further appeared, that when De Koure received 
the bills on behalf of the plaintiffs, he wrote a letter of information to 
them, placed the bills to their credit in account, and continued to have 
transactions with the plaintiffs after that time. Speare, the acceptor, had 
failed, and his effects were in the hands of trustees. 

On behalf of the defendants it was urged, that the action was not 
maintainable. Because, though an agent or factor cannot pledge the 
goods of his principal, he may pledge bills of exchange indorsed to him 
as a receiver for his principal, provided there be nothing in the indorse- 
ment to restrict the negotiability ; secondly, because there was nothing 
restrictive in this indorsement, for the words, " Pay to J. P. De Koure, 
Esq., or order, for account of Messrs. Treuttel & Wurtz," were only in- 
serted to show, that when the bills were paid, they should be carried, in 
the books of the acceptor, Speare, who had become insolvent, to the 
account of the plaintiffs, for the purpose of preventing confusion in 
Speare's accounts. Gibes, C. J., was of opinion, that De Roure had no 
right to indorse these bills to a stranger, that he had no right to deposit 
them, that their negotiability was restricted, and that the defendants 
might well have collected from the special indorsement, that the bills 
were not the property of De Koure. The jury found a verdict for the 
plaintiffs. 

Copley, Serjt., on a former day, having obtained a rule nisi, to 
set aside this verdict and enter a nonsuit, being now called upon by the 
Court, supported this rule. These bills were negotiable; they might 
have been discounted ; and, if they might have been discounted, they 
had been properly dealt with. These bills were in the hands of De 
Roure, who was not restricted from sending them into the market for the 
purposes of trade. In Evans v. Cramlington, 2 Vent. 307, the defend- 
ant drew a bill on Ryder, payable to Price, or order, for the use of Cal- 
vert. Price indorsed the bill to the plaintiff. Rider dishonoured 
•the bill. It was held that the plaintiff had a right to recover, r^ooc-i 
Price having a right of transfer, and having indorsed it to him. L J 
In the present case, the indorsement makes the bill payable to De Roure 
" for account of Treuttel & Wurtz." There is no dissimilarity between 
the cases ; and De Roure had a right to indorse the bill to the de- 
fendants. If it be admitted that these bills might be discounted, why 
may they not be deposited as a security ? What is the nature of this 



202 ROSS OM COMMEROIAIi lAW. 

deposit ? He Boure has a running account with the plaintiffs, paying^ 
and receiving money for them; this money he applies to the general pur- 
poses of business, and enters it in his accounts, as received for the use 
of those for whom he is agent. What difference is there between dis- 
counting the bills severally, and crediting the principals with the pro- 
ceeds of each, and entering the whole amount to their credit ? If the 
negotiability of these bills be conceded, it follows, that this case falls 
within the principles laid down in Collins v. Martin, 1 B. & P. 648 
for the ground on which it was there held, that agents might pledge, for 
their own private purposes, bills of exchange in distinction from other 
property, was, that the bills of exchange were negotiable. The special 
indorsement could not mean that De Roure should not negotiate them j 
it never could be intended that the plaintiffs should actually possess 
them ; for that firm could not have sued upon them, and, indeed, they 
are left for months in the hands of I>e Roure after his letter of advice to 
them. The legal property of this bill was in De Roure ; it was indorsed 
to him or order, and was negotiable ; he has indorsed it to the defend- 
ants, and, therefore, they are entitled to hold it. 

Dallas, J. — It is not necessary in this case to dispute the soundness 
of the decision in Collins v. Martin ; for, without doubt, if one deposit 
with his banker negotiable bills, and that banker afterwards deposit them 
with a third person, as a pledge for his own debt, the property in such 
bills will pass to the pledgee. Rut this is not a simple case of a bill 
indorsed; but De Roure, the agent of the plaintiffs,- being indebted to 
the defendants, deposits with them these bills, which were, by the indorse- 
r*2Sfin ™*'^*) made payable to him "for the account" of his *prin- 
L J eipals. The defendants take from De Roure these bills as a de- 
posit, expressly by way of security, and not by way of discount ; and the 
question is, whether they- did not take this deposit with sufficient notice 
that the bills did not belong to him ? I am of opinion that the defen- 
dants had sufficient notice that these bills were not his property ; and I 
therefore think that the plaintiffs are entitled to recover. 

Park, J — If our decision in this case broke in on the case of Collins 
V. Martin, I should hesitate before I gave my opinion. But the case is 
reduced to a single point, namely. Whether the defendants had not 
knowledge, when De Roure pledged these bills, that they were the pro- 
perty of the plaintiffs ? Of that, I think, there can be no doubt ; and 
therefore I am of opinioa that there is no ground for disturbing this 
verdict. 

BcRROtiGH, J. — There is a wide difference between bills of exchange 
discounted, and bills of exchange deposited. If the bills had been dis- 
counted, and the money received, the amount would have been imme- 
diately entered into the account ; but deposited as they were, had they 
failed, their amount would have been struck out. The bills, therefore, 
did not form a real item in the account. 

Rule discharged. 



BILLS OV EXOHANOE. 203 



III. — 8IG0URNEY v. LLOYD. 

Nor 14, 1828. — E. 8 B. & 0. 622. 5 Bing. 525. Eng. Com. Law Reps. vol. 15. 

Assumpsit for money had and received. Plea, general issue. The 
plaintiff was a merchant residing at Boston, in the United States of 
America. The defendants were bankers in London, carrying on business 
under the firm of Messrs. Jones, Lloyd, and Co. Before the trial the 
parties agreed that the plaintiff should take a verdict by consent for 
£3164, lis. Sd., subject to the following case, with liberty for either 
party to turn it into a special verdict. This was accordingly done with 
the *approbation of Lord Tenterden, C. J., before whom the r*oo7T 
cause oame on for trial : — L J 

In month of July, Captain Attwood, who commanded a vessel belong- 
ing to the plaintiff, took in payment of a cargo of flour, the property of 
the plaintiff, which he sold at Rio Janeiro, a bill of exchange for £3164, 
11«. Sd., drawn in a set of three by March, Sealy, Walker, & Co., of that 
place, on March, Sealy, & Co., of London. This bill was payable to the 
order of Messrs. Hendricks, Wierss, & Co., who indorsed it to Captain 
Attwood. The following are copies of the first and third parts of the 
bill :— 

"£2971, due 28th Novemh&r. 

" Rio de Janiero, llth July, 1825. 

" For £3164, lis. M. 1258. 

" At sixty days sight pay this first of exchange, second and third not 

paid, to the order of Messrs. Hendricks, Wierss, & Co., three thousand 

one hundred and sixty-four pounds, eleven shillings, and eight-pence, 

value of the same, which place to account, as per advice from 

March, Sealy, Waker, & Co." 

This bill was indorsed by the payees to A. Attwood. 

'■'■Rio de Janeiro, the llth July, 1825. 

"ror£3164, lis. 8t?. 

" At sixty days sight pay this third of exchange, first and second not 

paid, to the order of Messrs. Hendricks, Wierss, & Co., three thousand 

one hundred and sixty-four pounds, eleven shillings, and eightpence, 

value of the same, which place to account, as. per advice from 

" March, Sealt, Walker, & Co." 

This was indorsed by the payees to A. Attwood, by Attwood to the 
plaintiff, by the latter in the following words : — " Pay to Samuel Wil- 
liams, Esq., of London, or his order, for my usej" and by S. Williams 
to Jones & Co. 

Attwood sent the first of the set to the correspondent of the plaintiff, 
Mr. Samuel Williams of London, who was an American *agent 



and factor for merchants and planters, carrying on such business 



[•288] 



204 ROSS ON OOMMEEOIAL LAW. 

to a very great extent, inclosed in the following letter : — " Sir, I here- 
with have the honour to enclose you the first of exchange for £3164, 
11^. 8d. sterling, at sixty days sight, on Messrs. March, Sealy, & Co., in 
London, in favour of myself, it being the proceeds of a cargo of flour in 
brig Swiftsure, belonging to Henry Sigourney, Esq., Boston, America, 
which you will please to present for acceptance, and keep at the disposal 
of the second or third." But he did not indorse the bill.. Williams re- 
ceived the letter and bill on the 26th September, 1825, and procured the 
acceptance of the bill in due course. 

The third' of the set was remitted to the plaintiff; and he having in- 
dorsed it as aforesaid, " Pay to Mr. Samuel Williams, or order, for my 
use," remitted it to Williams in the following letter of the 17th Sep- 
tember, 1825 : — " Captain Amaziah Attwood, of my brig Swiftsure, 
arrived here yesterday, from Rio Janeiro, whence he sailed about the ■ 
July. He informs me that he left a letter directed to you, to be 
forwarded to you by the next English mail, containing the first of March, 
Sealy, Walker, & Co.'s draft on March, Sealy, & Co., London, dated 11th 
of July, at sixty days sight, for J3164, lis. Sd. sterling, in favour of 
Messrs. Hendricks, Wierss, & Co., and by them indorsed to said A. Att- 
wood. He thinks he did not indorse the draft; and if received, it can 
only be accepted. Enclosed you have third bill of the set indorsed to me 
by Captain Attwood, and to yourself by me. I presume that if the 
other should have been previously received and accepted, that a receipt 
on the one now transmitted would be accepted at maturity. Have the 
goodness, when you advise the receipt, which I trust will be as soon as 
possible, of the present, to inform me the standing of the acceptors. 
Henry Sigourney." The letter and bill were received by Williams on 
the 21st October, 1826. 

The defendants had no notice of the before-mentioned letters of Cap- 
tain Attwood and the plaintiff, Williams stopped payment on the 24th 
of October aforesaid, and a docket was struck against him on the 25th 
of the same month, upon which a commission, dated the 27th of the 
r*98cn s^"^^ month, was issued, *and he was declared a bankrupt imme- 
L J diately afterwards. At the time Williams received the bill in 
question, as well as at the time of his bankruptcy, the balance of account 
was in favour of the plaintiff to the amount of upwards of £3000, ex- 
clusive of the before-stated bill. On the morning of the 22d of October, 
when the discount hereinafter, mentioned was made, the balance in favour 
of Williams with the defendants was £3784, 10s. lOd. About eleven 
o'clock on that day Williams indorsed the bill in question, with others, 
amounting in the whole to JS7081, 17s. 9d., to the defendants, who were 
his bankers, and in the habit of discounting for him very largely, and 
the said bills were bona fide discounted for him, and credit given to 
him for the amount, less the discount; and subsequently, viz., at the 
clearing house, about six o'clock in the evening of that, day, the defen- 
dant paid Williams's acceptances due that day to the number of thirty- 
two, and three drafts, amounting to £10,683, 18s. Id. The bill in 
question was honoured at maturity, and the amount received by the 
defendants on the 28th November, 1825. 



BILLS OF EXCHANGE. 205 

F. Pollock, for the Plaintiff. — The bill belonged to the plaintiff, and 
be is entitled to recover its amount from the defendants. The indorse- 
ment was special, so as to prevent the indorsee from transferring any in- 
terest in the bill beyond the particular purpose or the particular indivi- 
dual mentioned in the indorsement. The earliest case where such a 
special indorsement is mentioned is Snee v. Prescott, 1 Atk. 247. There 
Lord Hardwicke says, " Promissory notes and bills of exchange are fre- 
quently indorsed in this manner, 'Pray, pay the money to my use,' in 
order to prevent their being filled up with such an indorsement as passes 
the interest." In Edie v. The East India Company, 2 Burr. 1227, "W^il- 
mot, J,, speaking of an indorser, says, "To be sure he may give a mere 
naked authority to a person to receive it for him ; he may write upon it, 
'Pray, pay the money to my servant, for my use;' or use such expres- 
sions as necessarily import that he does not mean to indorse it over, but 
is only authorizing a particular person to receive it for him and for his 
own use. In such case it would be clear that no valuable consideration 
bad been paid *him. But, at least, that intention must appear r:):nqn-i 
upon the face of the indorsement." It appears, therefore, from >- J 
these two authorities, that an indorsement in the form used in the pre- 
sent case will prevent the indorsee from passing the interest in the bill 
by a subsequent indorsement. The general indorsement of a bill makes 
it the legal property of the indorsee, and gives him the jus disponendi; 
but an indorsement for the use of another, is notice that the property in 
the bill is in that other, and that the holder is an agent for him, and 
cannot transfer the bill. [He was then stopped by the Court.] 

Parke, contra It may be conceded that the negotiability of a bill 

may be restrained by a special indorsement. The question, which in 
this case turns entirely on the construction of the indorsement, is,. 
Whether it restrains the negotiability of the bill, and makes every sub- 
sequent holder a trustee for the plaintiff? The general rule is, that an 
indorsement transfers to the indorsee all the rights of the indorser, and, 
among others, the right of transferring the interest in the bill by in- 
dorsement. More V. Manning, Com. 311, Acheson v. Fountain, 1 Str. 
557, Edie v. East India Company, 2 Burr. 1216. In the latter case, 
Wilmot, J., even intimated a doubt whether there could be a restrictive 
indorsement. But, conceding that there may be, the question is, 
Whether the indorsement in this case contains clear negative words 
restraining the negotiability of the bill ? The words must be construed 
most strongly against the plaintiff, the party using them. First, the bill 
is indorsed payable to order. Prima facie, therefore, it was transferable. 
The legal title was in Williams, though, as between the plaintiff and him, 
he might be bound to hold the bill for the plaintiff's usej and if Wil- 
liams had the legal title, he might transfer his interest in the bill by 
indorsement. The meaning of such an indorsement was considered in 
Evans v. Cramlington, 2 Vent. 307. There the bill was payable " to 
Price or order, for the use of Calvert." Price indorsed it to Evans ; 
after which an extent issued against Calvert, and the money due upon it 
was seized to the use of the king. These facts appearing upon the 
pleadings, two points were made upon demurrer; the one, whether Cal- 

May, 1854 14 



206 BOSS ON OOMMEROIAL LAW. 

„„^^ vert had such an interest in *the money as might be extended; 
[*^^^J and the other, whether Price had power to indorse the bill, or 
whether he had only a bare authority to receive the money for the use of 
Calvert; and the Court of King's Bench, and afterwards the Exchequer 
Chamber, held that Calvert had not such an interest as could be extended, 
and that Price had power to indorse the bill, and judgment was given 
for the plaintiff.-. In the case, as reported in Shower, p. 4, Lord Holt 
says, "This is a bill which is assignable by Price, and when Price 
assigned it he received the money, and that receipt was for the use of 
Calvert; and there Calvert hath his action ; but we can take notice of 
none but Price ; and at this rate the credit of bills of exchange will be 

spoiled." [Bayley, J The question was not raised there whether 

Price indorsed contrary to his duty to Calvert.] If Calvert's consent 
had been necessary, that must have been stated in the pleadings to have 
been given ; but there is no such averment. The pleadings are set out 
in 2 Ventris, 307. That case, therefore, is an authority to show that 
Williams had authority to transfer the interest in the bill in this case. 
The words " to my use" may be eonstrued as a direction from the plain- 
tiff to 'Williams, his agent, to apply the bill, or the proceeds of it, to his, 
the plaintiff's, use. The other construction makes the indorsement 
restrictive. But the intention is not clear, and it ought to be so, in 
order -to restrain the negotiability of the bill. If the first construction 
be adopted, the defendants clearly were not bound to see to the applica- 
tion of the money. If the words of the indorsement had been, "which 
place to my account," or "which hold to my use," the defendants would 
not have been bound to look to the application of the moneyi. [Bay- 
ley, J. — ^We do not know that the bill was intended to be negotiated. 
It probably was not, unless Sigourney gave authority.] The party to 
whom the bill was tendered is not bound to make any inquiry. Accord- 
ing to the argument on the other side, every subsequent indorsee would 
be a trustee for the plaintiff. That would be very inconvenient. [Bay- 

LEY, J We are not bound to decide that all the subsequent indorsees 

will be trustees for the plaintiff.] The argument is equally good if it he 
confined to the case of the first indorsee. The question turns entirely 
r*2921 °^ *^^ intention *of the indorser. In Evans v. Cramlington, 1 
L J Show. 4, Lord Holt says, that when Price assignedthe bill, and 
received the money, he became trustee for Calvert. If that be so, then 
Williams, by indorsing for value to Lloyd, became trustee for the plain- 
tiffs. That was before the bill became due. He could not make the 
defendants trustees for the plaintiffs. The reasonable construction of 
-the indorsement is, that it was a direction by the principal to his selected 
agent to apply the proceeds to his use. If there were any fraud or other 
suspicious circumstances, the case might have been different. Treuttel v. 
Barandon, 8 Taunt. 100, proceeded on that ground. [Bayley, J.— 
Here the defendants were parties to the misapplication of the money;] 
They applied the money generally according to the directions of Wil- 
liams; they could not know in what mode Williams was to apply the 
money to the use of the plaintiff. This was a bona fide discount in the 



BllliS OP EXCHANGE. 207 

way of trade to Williams himself. The defendants were not trustees for 
the plaintiff. 

Lord Tenterden, C. J. — I am of opinion that in this case the plain- 
tiff is entitled to recover. It appears from the report of the case of 
Snee v. Prescott, that in 1743 an indorsement in this form was not un- 
usual J and it appears to have been the opinion of Lord Hardwicke in 
that case, and also to have been the opinion of Mr. Justice Wilmot, in 
the case of Edie v. The East Company, that such an indorsement will 
have the effect of preventing a subsequent transfer of the bill for the 
benefit of any other than the person for whose use it is expressed to have 
been made by the indorsement. The case of Ancher and Others v. The 
Bank of England is an authority to the same effect. The indorsement 
was not preoisely in the same form as in the present case, but the effect 
of it is the same. The indorsement there was, "The within must be 
credited to Captain Morten L. Dahl, value in account." An indorse- 
ment purporting to have been made by Dahl was afterwards forged, and 
the Bank of England discounted the bill. The acceptors did not pay it; 
before it became due they had failed, and one Fulgberg paid it for the 
honour of Ancher and Co., the plaintiffs; and upon the ground that the 
indorsement *had restrained the negotiability of the bill, they r»oQo-i 
brought an action for money had and received against the bank. L J 
Lord Mansfield directed a nonsuit ; but upon a rule to show cause why 
there should not be a new trial, and cause shown. Lord Mansfield, Willes, 
and Ashurst, Js., thought the indorsement restrictive, and that the 
plaintiffs were entitled to recover; but Buller, J., thought otherwise; 
upon which Lord Mansfield said, the whole turned on the question, 
wh^her the bill continued negotiable? and if they altered their opinion, 
they would mention the case again ; but it never was mentioned after- 
wards; and upon a new trial, Lord Mansfield directed the jury to find 
for the plaintiff, which they did. 

It has been said that the indorsement " Pay to Williams for my use,'* 
is a mere direction to Williams to apply the money produced by the bill 
to Sigourney's use; but the words taken in that sense would be useless; 
for whether the words be on the face of the indorsement or not, as soon 
as Williams received the proceeds of the bill, he must necessarily apply 
them to Sigourney's use, and place them to his credit in the account 
between them. So that those words will have no effect whatever, unless 
they have that of restraining the negotiability of the bill, or at least of 
making the first indorsee (if he takes the bill with these words on it, as 
Williams did in this case^ a trustee for the original indorser. 

The case of Evans v. Cramlington, when duly considered, does not seem 
to me to be sufficient to countervail the authorities to which I have 
already adverted. The bill m that case was drawn by Cramlington upon 
one Ryder, payable to T. Price, or his order, for £500, for the use of F. 
Calvert. Ryder accepted, but did not pay the bill. Price indorsed it to 
Evans for value. The latter brought an action against Cramlington the 
drawer ; he pleaded that Calvert (who was named in the bill as the ces- 
tuique use) was an officer of the excise, and indebted to the King in such 
a sum, and that upon an Exchequer process at the suit of the king this 



208 KOSS ON OOMMERCIAIi LAW. 

^500 was extended. in his hands. To this plea there was a demurrer. 
It appears, therefore, that Cramlington, in answer to the claim of Evans, 
the indorsee, set up what is sometimes denominated the jus tertii; 
r*9q4.1 ^^^ ^^^ °^^^ question which it was necessary *for the Court to 
L J determine was. Whether the bill being in trust only for the use 
of Calvert, was liable to be seized under the extent against him ? The 
Court was of opinion that it was not. The proposition of Cramlington, 
that the jus tertii intervened, failed entirely, and it became unnecessary 
to decide any other point. That case, therefore, as it seems to me, is not 
of sufficient weight to countervail the opinions delivered in Snee v. Pres- 
cott, Edie v. The East India Company, and Ancher v. The Bank of Eng. 
land, Doug. 637. 

The use of indorsements of this kind is not small, nor are they, as it 
seems to me, inconsistent with the interests and convenience of com- 
merce. Such an indorsement will not prevent the indorsee from receiving 
the money from the acceptor when the bills becomes due. If he pay it 
to his principal all will be well, but the indorsee must look to him for the 
application of it. It will have the effect of preventing a failing man from 
disposing of the bill before it becomes due, and from pledging it to 
relieve himself from his own debts at the expense of his correspondent. 
I cannot see that the interests of commerce will be prejudiced by our 
holding that such an indorsement is restrictive. On the contrary, I think 
that the interests of commerce will thereby be advanced. It is said, that 
it cannot be expected that bankers or others when requested to discount 
such bills as this, should look into the accounts between the principal and 
his agent. I agree it cannot be expected they should ; but still if they 
take the bill so indorsed, they take it at their peril, and must be bound 
by the state of the accounts between those parties. 

Batley, J. — The indorsement in this case is in the words, " Pay to 
Williams or his order for my use." The question is. Whether the words 
"for my use" have or have not any effect with reference to the bill itself? 
The person who remits a bill may give private directions to his corres-' 
pondent in the letter in which the bill is inclosed, and if he means the 
directions to be private, they will be confined to the letter. But when 
he introduces the words " to my use" on the bill itself, he notifies to the 
world that he, the party indorsing, has not given to the indorsee a gene- 
pjKOQK-i ral unlimited authority to apply it to his own *purposes, but only 
•- J to apply it to the use of him the indorser. It has been suggested, 
that the most convenient construction to put on the words will be, to hold 
that the indorser meant thereby to direct Williams to apply the money 
to his, the indorser's use, but not to put the indorsee on his guard. My 
opinion is, that this is the most convenient construction which will most 
effectually protect the party who appears by the form of the indorsement 
used by him to have thought that he required protection. It is said, why 
introduce the words " or order ?" The purposes of the indorser may, 
perhaps, have required that the bill should be indorsed. But before any 
person could honestly take that bill and advance money on it, he ought, 
seeing the words "for my use" on the bill, to have satisfied himself, from the 
correspondence and the state of the accounts between Sigourney and Wil- 



BILLS OP EXCHANGE. 209 

liams, whether the latter was indorsing it for the benefit of Sigourney or 
for himself. And if such a person advances money upon a bill so in- 
dorsed without making such inquiry, he advances it at his peril. Now, 
in this instance, the defendants advanced money on this bill without 
making any inquiry, and applied the whole of that money to the use of 
Williams. The bill was discounted on the 22d of October, the day after 
it was received. At that time Williams had more than £3000 in the 
hands of the defendants. They discounted this and other bills to the 
amount of £7000, and in the course of the day all the money produced 
by this and other bills, to the amount of jE10,000, was applied to the use 
of Williams, so that in the afternoon of that day they had in their hands 
£182 only. 

As to the case of Evans v. Cramlington, it is sufficient to say that that 
case came before the Court on demurrer, and that there was no question 
whether there had been any misapplication of the money which had been 
received by means of the bill. In this case there has been a misappli- 
cation of the money by the defendants. That is a sufficient distinction 
between this case and that of Evans v. Cramlington. For these reasons, 
I am of opinion that in this case the plaintiff, who made the special in- 
dorsement, thereby effectually protected himself, and is entitled to the 
judgment of the Court. Postea to the plaintiff. 

*This judgment was afterwards affirmed in the Exchequer r:^qQR-i 
Chamber. <■ J 

6 Bing. 525. Bng. Com. Law Reps., vol. 15. 

Best, C. J. — We are all of opinion that the judgment of the Court of 
King's Bench must be affirmed. Whoever reads the indorsement on this 
Bill of Exchequer must perceive that its operation is limited, and that 
the object of the indorser was to prevent the money received in respect of 
the bill from being applied to the use of any other person than himself. 
To whomsoever the money might be paid, it would be paid in trust for 
the indorser ; and into whose hands soever the bill travelled, it carried 
that trust on the face of it. And we see no inconvenience to commercial 
interests from such a limitation of the effect of the indorsement so ex- 
pressed. The only result will be to make parties open their eyes and 
read before they discount. 

It is impossible to read this indorsement without seeing that some in- 
quiry is necessary, for if such be not the use of the words introduced, they 
are of no use. But if a use can be found further, the Courts must apply 
them in the way in which they are intended to operate. 

The indorser has added the words " or order" to the name of the in- 
dorser, because if he had not done so, the indorser must have attended in 
person to obtain payment of the bill, and the short way to obviate that 
inconvenience, was to introduce the words or order. But he still intended 
that the person ordered by the indorsee to receive the amount, should receive 
it to the use of him, the indorser. But the defendants below, instead of 
paying the amount of the bill for the use of Sigourney, the indorser, 
have discounted it for the use of Williams, the indorsee. We are all 
therefore of opinion that the judgment of the Court of King's Bench 
must be Affirmed. 



210 KOSS ON OOMMEROIAIi LAW. 

F*9Q^1 *'^° indorsement intended to be restrictive must be clearly expressed, 
•^ ' as restriction will not be presumed from ^^qjiivocal language. The case 
of Potts V. Beid, 6 Esp. 57, was an . assumpsit on a bill of exchange by an 
indorsee. The original indorsation was in these terms, " Pay the contents of 
the within bill to Evan Pugh, being part of the consideration money in an 
indenture of assignment, bearing date the 28th day of December, 1804, executed 
by the said Evan Pugh, to Robert Reynold Reed, and myself, A Gamon." 
The defendant contended, — This is a restricted indorsement, and so the present 
holder cannot claim as indorsee. The nature of a special indorsement is to 
restrict the payment to a particular person, as in the case of Ancher v. Bank of 
England, Dougl, 615, where the bill was to be credited to the account of Dahl, 
and was held not to be farther negotiable. In this case, Pugh's name was 
specially inentioned, and the fund from which the payment was made. That 
fund must be taken to have, been credited by the assighment mentioned in the 
indorsement, and bills payable out of a particular fund are not negotiable. The 
plaintiff answered, — The fund mentioned has nothing to do with the payment of 
the bill, for which the defendant was at all events liable. It was mentioned 
only as the consideration for it ; and as for the indorsement, it was a special 
indorsement only as far as mentioning the name of the indorsee, whose indorse- 
ment it rendered it necessary to prove, and nothing more. Lord Ellenborough, 
— " 1 am of opinion, that this is not a restrictive indorsement, and as to the 
other words they are surplusage, and cannot affect the subsequent negotiability of 
the bill. If the bill was payable out of a particular fund, that womd affect the 
negotiability of the bill ; but what is here mentioned is not the fund out of 
which the bill was to be paid, but the consideration for which the bUl was given 
which the holder had nothing to do with. Mr. Gamon, the defendant, was here, 
personally liable,'though the liability might have been created by the fund men- 
tioned in the indorsement, and as arising from the fund so designated by the 
indorsement ; and whenever a party is personally liable, a biU is negotiable. It 
was, however, necessary to prove Pugh's indorsement, as his name was mentioned 
in the indorsement ; but though so made payable to him by name, there was 
nothing to restrain its future negotiability. In the ease cited the bill was to he 
credited to Dahl's account, no such restriction or direction was here." 



r*2981 *^'™^^^ ^ ^^^ ^® OEIGINALLT PAYABLE TO OEDER OR BEARER, 
L -^ AH INBOESEMENT IN FAVOUR OP A PARTICULAR PAETY, WITH- 

OUT ABDINO THE WORIVS " OR OEDER," WILL NOT RESTRAIN ITS 
NEGOTIABILITT. 

EDIE V. EAST INDIA COMPANY. 

Trinity Term, 1761.— E. 2 Burr. 1216. 1 Bl. 295. 
This was an aotion brought by the indorsees, upon two foreign bills 
of exchange drawn by Colonel Clive, then in the East Indies, upon the 
East India Company, an^ accepted by them, payable to Mr. Campbell, 
or order, then also in India, and indorsed by Mr. Campbell to Mr. Kobert 
Ogilby. One of these bills was by such indorsement directed to be 
paid to Robert Ogilby or order, in the usual way of indorsing j and no 
dispute or question arose upon it.. The other bill was indorsed by Mr. 
Campbell to Robert Ogilby : but the words " or order " were orignally 
omitted in this indorsement;, and afterwards, put in, by anothe? hand 
before the trial. These hills thus indorsed by Mr. Campbell to Mr. 
Ogilby, (without adding the words « or order " in the indorsement of the 
latter,) were by him indorsed to the plaintiff Edie and Lard, or order. 



BILLS OF EXOBANQE. 211 

Ogilby became insolvent ; and the question then was, — who was to bear 
the loss, whether Mr. Campbell or the plaintiffs 7 for the East India Com- 
pany were no more than stake-holders. The dispute arose only upon this 
latter bill ; for the first bill was given up at the trial by the counsel for the 
defendants, and a verdict was taken for the plaintiff upon that count. 
But on the second, an objection was taken to the want of the words "or 
order," which the defendant's counsel insisted were necessary to be ori- 
ginally inserted by the indorser and that the omission of them was 
equivalent to the most restrictive words that he could have made use of 
in order to limit the payment. And, accordingly, on this second count, 
a verdict was found for the defendant. 

Mr. Morton, of counsel for the plaintiffs, having moved for a new trial, , 
Mr. Norton and Mr. Wedderhurne now showed cause, on behalf of the 
defendants, why a new trial should not be granted. 

*In support of the motion, Mr. Morton and Mr. Yates had rifann-i 
cited the three following cases, viz.. More v. Manning, Comyns, L J 
311, in point ; where it was holden, " That a promissory note to pay to 
one or order, is assignable toties qwoties by the indorsee or indorsees, though 
the words ' or order ' be omitted in the indorsement." Acheson v. Foun- 
tain, 1 Strange, 557, in point also; it being there holden, "That an in- 
dorsable note indorsed to A. B. without saying ' or order,' is an indorse- 
ment to the indorsee or order ; for the law interprets the assignments 
to be in the same manner as the note is drawn." And Evans v. Cram- 
lington, in Carthew, 5, and 2 Yentris, 109, 310, which was said to be 
applicable to the present case. 

They alleged that every indorsement imports that the value has been 
received by the indorser, and that a promissory note or bill of exchange, 
origii»% made payable to one or order, is in its own nature assign- 
able ; aad the assignee has the whole interest in it, and may assign it as 
he pleases ; and any restriction or confinement of the assignment of it is 
contrary to the nature of the thing, and therefore void. An indorse- 
ment is an assignment ; and, for the reasons aforesaid, is not restrainable 
by the omission of words, or even by negative words ; and if it be given 
in blank, it may be filled up by the indorsee or by any one etse, even in 
the face of the Court at the trial. 

Having thus established this principle, " That the bill of exchange 
being originally made assignable and negotiable, and being in its own 
nature assignable, must continue always so ; and that the law will inter- 
pret the assignment to be made in the same manner in which the bill is 
drawn, although the words <or order' be oooiitted 

They grounded their motion for a n^ew trial upon these two foun- 
dations : — • 

First, That the jury have found directly contrary to this settled lawj^ 
and have founded their verdict upon the custom of merchants, which, 
they suppose to be quite to the contrary ; and of which custom of mer- 
chants, evidence was permitted to be given at the trial ; which evidence 
should not have been allowed. For the custom of merchants is part of 
the law of England ; and the law of England being already fully settled 



212 ROSS ON COMMERCIAL LAW. 

r*«iftm *°^ ^^^^ point, no evidence in contradiction to it ought to have 
L J been admitted ; nor can any finding of a jury alter it. 

Second, That if the counsel for the plaintiff had apprehended that such 
sort of evidence would have been gone into at the trial, they could and 
would have produced better and fuller evidence than they did, to prove - 
that the custom of merchants was really, and in truth and fact, agree, 
ble to the law as settled ; and they alleged, that no fact of usage was 
proved at the trial, to support a notion " that the acceptor was not liable 
upon such an indorsement as this." 

Mr. Norton and Mr. Wedderhume, contra for the defendants, insisted 
that the present verdict was right, and ought to stand. 

It has been urged, first, "That this bill is in its nature negotiable;" 
and, secondly, " That being so, it cannot be restrained by this or any 
other indorsement." 

As to the first — They agreed a bill of exchange to be negotiable in its 
nature. But it does not follow, they said, that because it was once so, 
it must therefore always continue so. For the payee has the absolute 
property in it ; he is the purchaser of it; and why should he not Jimit 
the payment of it as he pleases? No man can be injured by this; no 
man can be deceived by it ; it cannot be attended with the least incon- 
venience. 

• No case can be cited to the contrary. The cases that have been cited 
do not apply to it, as will appear presently. 

An imperfect indorsement, an indorsement in blank, indeed may be 
supplied : but the owner may, if he thinks proper, indorse it negatively 
and iipon terms; and then the indorsee takes it upon those terms, and 
under that restriction, which the indorser has expressly imposed upon it. 
This is no more than a naked authority to receive the money. It is not 
true " That every indorsement imports value received by the indorser." 
For an indorsement may be so worded aS' ^o show that the interest' re- 
mains in the indorser ; as, for instance, " pay this bill to my steward, 
and to no other person ;" or, " pay to such a one for my use, and to no 
other person whatsoever." And whether he has or has not so limited 
it, is a question of fact, and not of law ; and it depends upon the cus- 
tom of merchants. 

r*^On *'^^^ *'^^^ °^ More v. Manning does not contradict our prin- 
L J ciple. It does not appear that that was not an indorsement in 
blank, which (it is agreed) does not destroy its negotiability. The as- 
signment was there treated as an absolute assignment to Witherhead : it 
must have been an indorsement in blank ; and the case goes upon that 
supposition. However, that came before the Court upon demurrer:.' 

The case of Acheson v. Fountain was only a question, " Whether the 
plaintiff's evidence supported her declaration ?" but her demand was full 
and clear without those words. The case could not require the reasons 
there given ; .therefore they are at least extrajudicial, or perhaps added 
by the reporter. 

As to Evans v. Cramlington, 'tis nothing like this case, nor is any 
inference to be drawn from it. 

Besides, all these cases are only upon promissory notes, which depend 



BILLS OF EXCHANGE. 213 

upon our municipal laws ; and promisBory notes are, by the statute of 3 
& 4 Anne, c. 9, put upon the same foot with inland bills of exchange. 

But foreign bills of exchange stand upon quite another foot ; namely, 
upon the general law and custom of merchants. And the verdict sup- 
poses and proves the custom of merchants to be with the defendants ; 
and the evidence of several eminent merchants and experienced persona 
Ut the trial was agreeable to the finding. And if they could have en- 
countered it, why did they not ? Their omitting to do so is surely no 
ground for a new trial. 

Mr. Mortem and Mr. Yates in reply They admit the question to be, 

" What is the true construction of such a restrained indorsement as this 
is ?" And certainly this sort of indorsement makes or rather continues 
a bill of exchange generally negotiable. Messieurs Edie and Lard are 
in the case of every common indorsee. The cases that we have cited 
are plain and clear on our side j on the other side, they suppose imagi- 
nary circumstances, which did not really exist in them. The determi- 
nations upon promissory notes prove " that the law was likewise so upon 
foreign bills of exchange." The fact of usage that would have been 
cogent and binding if proved, should have been a refusal to negotiate a 
bill with such a "limited and restrained indorsement. If this r^orvo-i 
bill was to go back to India, protested by Messieurs Edie and L . J 
Lard, for non-payment by the Company and the indorsers, undoubtedly 
the drawer would bo liable to Mr. Edie and Mr. Lard for the payment 
of it. 

Lord Mansmeld I thought at the trial that the defendants might 

be at liberty to go into the usage of merchants upon this occasion. And 
Mr. Eaoe, cashier of the Bank of England, gave evidence " That the 
Bank, if they ever discounted the bills not indorsed to order, did it only 
upon the credit of the indorser ; but that otherwise they would not take 
them, not considering then} as being negotiable." Mr. Simon, a very 
eminent and experienced merchant, deposed, th^t he considered the 
omission of these words as restrictive of the indorsement to the particular 
individual person specified in the indorsement : and he added that it was, 
in his opinion, merely in the nature of a personal authority " to receive 
the money," and was not negotiable. So Mr. Grant, another witness on 
the part of the defendants, declared his opinion also to be. So also Mr. 
Begnier, their fourth and last witness. These were the four witnesses 
for the defendants. 

> The plaintiffs, on their part, called Mr. Bichard Cope, (partner with 
Mr. Honeywood the banker,) but they were mistaken in him ; for he 
agreed with the other four witnesses exactly. Another witness called 
by the plaintiffs was Mr. Udney, who thought it sufficient without the 
words "or order;" and attested that he had himself discounted one, and 
said he had paid he believed fifty bills where the words "or order" were 
omitted in the indorsement. Mr. Macbean, a notary public, also, in his 
opinion, held the indorsement of a bill of exchange to be negotiable, 
notwithstanding the omission of these words, and that no objection of 
this sort was ever made. Indeed, if the bill should be indorsed « pay 
the contents to A. B. only," it was looked upon, he said, to be a re- 



214 BOSS ON COMMEROIAIi LAW. 

striction of the payment to A. B. personally. Mr. Uny and Mr. Ander- 
son deposed to the same effect, « that the omission of the words ' or 
order' did not prevent the negotiahility." 

But the plaintiffs did not, however^ come prepared with particular 
r*S0^1 *''i'°8sses to the usage in such cases ; not expecting that the evi- 
L J dence in support of such a usage would have been admitted. 

I told the jury that by the general law (laying the usage out of the 
case) the indorsement would follow the nature of the original bill, and 
be an absolute assignment to the indorsee or his order. And after hav- 
ing told them that this was the general law, then I left to them upon 
the particular evidence of the usage that had been laid before them, and 
recommended it to them to consider well of this evidence ; and told 
them, that if they found an usage so established and settled amongst 
merchants and traders as to be clear and plain and beyond doubt, they 
might find a verdict for the defendants upon that second bill : but I 
directed them, that if they were doubtful of the usage, or if the usage 
appeared to them not to be fully and clearly established, or to be the 
other way, then they ought to find for the plaintiffs. 

I told them that the question arose upon the insolvency of Ogilby, 
the first indorsee, and that- it ought to be considered by them who it was 
that gave the trust to Ogilby ; for he that gives the trust, ought to run 
the risk of his credit. I observed that this indorsement was made by 
Mr. Campbell,, the payee, to thisi Ogilby ; and if he meant to trust 
Ogilby, it was but reasonable that he should be the person to suffer by 
Ogilby. And it was clear that ho meant to trust Ogilby with the money ; 
for it is. acknowledged on all hands that Ogilby himself had a right to 
receive it of the Companyj whether he had a right to indorse the bill to 
another person or not. 

The jury stayed out a considerable time, and then brought in a verdict 
for the plaintiffs upon the bill indorsed to Ogilby or order, (which was 
not disputed j) but they gave their verdict for the defendants upon that 
count which declared upon the second bill (for £2000) which was in- 
dorsed to him without adding the words " or order." 

In the whole course of the evidence, no one fact was proved where 
the indorsee to whom a bill was indorsed, without: adding the words "or 
order," ever actually lost the money, so as to pwt ham upon disputing 
the point. 

Since the trial I have looked into the cases, and have considered 
r*3041 *^^^ tbing with a great deal of care and attention, and thought 
L J much about it ; and I am very clearly of opinion, that I ought 
not to have admitted any evidence of the particular usage of merchants 
in such a case. Of this I say I am now satisfied j for the law is already 
settled. 

I lay the case of Evans v. Cramlington out of the way, as I do not see 
that it is much applicable to the case now before us. But I go upon the 
two cases of More v. Manning, and Aoheson v. Fountain. The former 
was an assumpsit upon a promissory note given by Manning to Statham 
or order ; Statham assigned it to Witherhead, and Witherhead to the 
plaintiff. Upon a demurrer to the declaration, exception was taken, 



BILLS OF EXOHANQE. 215 

"because the assignment was made to Witherhead, without saying to 
him and order, and then he cannot assign it over." But it was resolved 
by the whole Court that it was good : for if the originable bill was as- 
eignable, then to whomsoever it is assigned, he has all the interest in the 
bill, and may assign it as he pleases. And very right that was ; for the 
main foundation is, " what the bill is in its origin." And, accordingly, 
as that note was originally made payable to Statham and order, they 
held the assignment of it to Witherhead to be an absolute assignment to 
him, which comprehended his assigns. It could not be an indorsement 
in blank, because it is stated "that the assignment was made to Wither- 
head, without saying to him or order." The point resolved was, " That 
the assignment to Witherhead was absolute." The words added at the 
end of the report are inaccurate, and might, at first view, occasion a lit- 
tle confusion ; but, to be sure, the Gourt went into an additional argu- 
ment, which the reporter has omitted to particularize. But the declara- 
tion sets out the assignment, which is " an assignment by Statham to 
Witherhead, omitting to add the words ' and order.' " 

Then as to the other case of Acheson v. Fountain. The plaintiff had 
declared upon an indorsement made by William Abercrombie, whereby 
he appointed the payment to be " to Louisa Acheson or order :" upon 
producing the bill in evidence, which appeared to be originally made 
payable to Abercrombie or order, yet Abercrombie's indorsement was 
only this — " Pray pay the contents to Louisa Acheson." It was ob- 
jected "that *the indorsement did not agree with the declara- r:^qriK-i 
tion." The Court notwithstanding this gave judgment, upon L J 
the ground of a general proposition in law, " that a bill is negotiable, 
without adding those words to the indorsement." And though the 
plaintiff might perhaps have had leave to amend his declaration in the 
point objected to, yet the declaration came before the Court unamended, 
so that the objection came with its full strength : and the Court gave 
their opinion upon the point, as a matter of clear settled law ; for the 
whole Court were of opinion, « that it was well enough, that being the 
legal import of the indorsement; and that the plaintiff might upon this 
have indorsed it over to another,, who would be the proper order of the 
first indorser." And accordingly judgment was given for the plaintiff. 

A draught drawn upon one person, directing him " to pay money to 
another or order," is, in its original creation, not an authority, but a bill 
of exchange, and is negotiable. It belongs to the payee to do what he 
thinks proper with it, and to use it as best suits his convenience. It is 
his property, and he may assign it as such and to whom he pleases : and 
his direction " to pay it to such a one," is a direction " to pay it to him 
or his order ;" for he assigns his whole property in it, and has had a 
valuable consideration for so doing. 

Another thing observable is the absurdity of the opinion of the mer- 
chants, (which they avowed to be their opinion,) " that a bill thus indorsed 
was not. to go to executors or administrators, in case of the indorsee's 
death ;" whereas there can be no doubt that such an interest is transmis- 
sible to executors or administrators. 

The words " or ordev," are not necessary to be inserted in the indorse- 



216 ROSS ON COMMERCIAL IiAW. 

ment, any more than the words " executors or administrators" are neces- 
sary to be added to it. 

The point now in question has been already solemnly settled both in 
the Court of King's Bench and Common Pleas, by the two adjudications 
that have been mentioned ; and therefore witnesses ought not to have 
been examined to the usage, after such solemn determinations of what 
was the law. 

Therefore there ought to be a new trial. 
r*3061 "^^ *° '""^ ^°^^> I ^^^"^^ tliere should be none in this case. *For 
•- J the verdict must be set aside generally, not in part only. Yet 
this verdict is agreed to be right upon the first count ; and that is found 
for the plaintiffs. Therefore there ought to be no costs upon granting a 
new trial in the present case, since the merits were always clear for the 
plaintiffs on the first count ; and it now appears that nothing remained 
to be tried on the second. 

Mr. Justice Denison concurred in toto. This verdict upon the second 
count is not well founded. The point in question is not matter of fact, 
but matter of law. I never before heard of this notion of a restrictive 
assignment of a negotiable bill. Where a bill is originally made payable 
to A. or order, it is of course, and in its very essence, negotiable from 
hand to hand. An inland bill of exchange is assignable in its nature, 
toties quoties : and promissory notes are now put upon the same foot with 
them. Foreign bills of exchange are equally so by the law of merchants, 
and by the settled determinations of courts of law in England. This is 
a matter of law : and the law is clearly and fully fixed. There is no 
instance of a restrictive limitation, where a bill is originally made pay- 
able to a man or order. I never heard of an indorsement to A. only. In 
general, the indorsement follows the nature of the thing indorsed, and is 
equally negotiable. But at least here is no such restraint as that : here 
is nothing from whence to collect an intent to limit and restrain it. The 
law has determined that the bill is negotiable in itself j and there is no 
law to the contrary, nor any pretence for it in the present case. And it 
would be infinitely inconvenient if it should be otherwise ; for, as no cir- 
cumstances at all appear, it would destroy or disturb that certainty which 
transactions of this nature require. 

An executor or administrator may indorse a bill or promissory note, 
within the custom of merchants. In the case of Kawlinson v. Stone, M. 
20 G-. 2, B. E. upon a writ of error from C. B., an inland bill of ex- 
change was made payable to A. or order : A. died, and the administra- 
tor of A. assigned the note to the plaintiff in the Common Pleas ; for 
whom that Court gave judgment upon demurrer. The Court, upon argu- 
ment of the writ of error here, held " that the executor or administrator 
r+^OTI *™'8^* assign it over;" and they aflBrmed the judgment of the 
L J Court of Common Pleas. The executor or administrator is only 
assignee in law, not in fact ; yet they held that he might assign it by the 
name of executor or administrator, and that it was the common method 
to do so. The indorsement virtually included it. 

Now the present case includes that and more ; for here the first in- 
dorsee was an assignee in fact. And it ought to be so, for the sake of 



BILLS or EXCHANGE, 217 

certainty and for the benefit and convenience of trade. No intention ap- 
pears here to restrain it; and, in general, the law says "it is assignable." 
And it it not material when or how filled up ; for it is every day's prac- 
tice to fill up the indorsement long after it is made, nay, even in Court 
at the trial. I will not give any opinion, whether the indorser might 
have limited his assignment by some clear plain negative words, if in fact 
it had been his intention to limit and restrain it. Here no such inten- 
tion appears : the indorsement is general, and the law is settled, " that 
the assignment follows the nature of the thing assigned." And the law 
being already so settled, the jury ought not to have given their verdict 
upon an opinion contrary to it. 

A new trial ought therefore to be granted ; but no costs should be 
paid, for the reasons already mentioned. 

Mr. Justice Fostee concurred that there should be a new trial, be- 
cause it is a verdict against a known and settled rule of law; as appears 
by the two adjudged cases reported in Comyns and Strange. Therefore 
it ought not to have been left to a jury at all. 

]y{uch has been said about the custom of merchants. But the custom 
of merchants, or the law of merchants, is the law of the kingdom, and 
is part of the common law. People do not suflSciently distinguish be- 
tween customs of different sorts. The true distinction is between general 
customs, (which are part of the common law,) and local customs, (which 
are not so.) This custom of merchants is the general law of the king- 
dom, part of the common law; and therefore ought not to have been 
left to the jury, after it has been already settled by judicial determina- 
tions. But there should be no costs paid upon this 'occasion, p^onn-i 
because the verdict is both against law and against the opinion <- -I 
and direction of my Lord Chief Justice upon the second count; and is 
with the plaintiffs on the first. 

Mr. Justice Wilmot was of the same opinion. The law, with regard 
to this point, is settled and fully established by the two cases which have 
been cited, and upon right and proper principles. This original contract 
is, « to pay to such person or persons as the payee, or his assignees, or 
their assignees, shall direct :" and there is as much privity between the 
last indorser and the last assignee, as between the drawer and the first 
payee. When the payee assigns it over, he does it by the law of mer- 
phants ; being a chose in action, not assignable by the general law. And 
the indorsement is part of the original contract, and is incidental and ap- 
purtenant to it in the nature of it, and must be understood and intei> 
preted to be made in the same manner as the bill was drawn : and the 
indorsee holds it in the same manner, and with the same privileges, 
qualities, and advantages, as the original payee held it ; that is, as an 
assignable negotiable note, which he may indorse over to another, and 
that other to a third, and so on at pleasure. 

There is a great deal of difference between giving a naked authority 
ti to receive it," and transferring it over by indorsement. And I doubt 
whether he can limit his indorsement of it by way of assignment, or 
transfer to another, so as to preclude his assignee from assigning it over 
as a thing negotiable. For the assignee purchases it for a valuable con- 



218 ROSS ON OOMMEROIAL LAW. 

sideration ; and therefore purchases it with all its privileges, qualities, 
and advantages, one of which is its negotiability. 

To be sure, he may give a mere naked authority to a person to receive 
it for him :" he may write upon it,— "Pray pay the money to my ser- 
vant to my use ;" or use such expressions as necessarily import that he 
does not mean to indorse it over, but is only authorizing a particular 
person to receive it for him and for his own use. In such case, it would 
be clear that no valuable consideration had been paid him. But at least 
that intention must appear upon the face of the indorsement. Whereas 
r*R0Q1 ^^'f") 110 ^^'^^ thing, nor any thing tending to it, *appears upon 
L J the face of the indorsement : it is a general assignment without 
any Testriction at all. 

The principle I rely upon, is the paying a valuable consideration for 
the assignment. 

In the case of More v. Manning, (which is in point,) those words added 
at the end, " that at a trial, when a bill is given in evidence, the party 
may fill up the blank as he pleases" — are redundancy. And that in- 
dorsement could not be an indorsement in blank : it appears otherwise 
from the case itself. It was made to Witherhead, but without saying 
" to him and order." So the other case reported in 1 Strange, 557, is 
likewise in point. And 'there is no difference, whether the determina- 
tions be on promissory notes or on bills of exchange : it is just the same 
thing, because it is to be governed by the same rule, [He cited a manu- 
script report of that same case of Aoheson v. Fountain, which is reported 
by Sir John Strange ; which agreed with Sir John's report of it and 
with mine exactly.] There is another case in Carthew, 403, Fisher v. 
Pomfrett, that shows this to be a right determination ; (though the state 
of that case was indeed just the reverse of the present case.) It was a 
bill of exchange payable to T. S., who indorsed it, "pay the contents of 
this bill under the order of Mr. Fisher." Fisher brought his action as 
indorsee. The defendant demurred to the declaration, because the in- 
dorsement was not to Fisher himself, but to his order. But the Court 
held that Fisher might well bring the action : " for amongst tradesmen, 
that form was commonly used, though intended to be made payable to 
the person whose order is mentioned." And Fisher had judgment. 
Therefore, a note indorsed over to A. would enable him to indorse it 
over to B., and so on. For the convenience and course of trade is to be 
attended to : the intention is to be regarded, not the form. 

The custom of merchants is part of the law of England : and courts 
of law must take notice of it as such. There may indeed be some ques- 
tions depending upon customs amongst merchants where, if there be a 
doubt about the custom, it may be fit and proper to take the opinion of 
merchants thereupon ; yet, that is only where the law remains doubtful. 
And even there, the custom must be proved by facts, not by opinion 
r*3l01 °°^^' ^^^ '* *must also be subject to the control of law; and so 
L J was the case of Hawkins v. Cardy, reported in Carthew, 66, and 
in 1 Salk. 65. There the defendant had given a note under his hand, 
"to pay unto E. G-. or order a certain sum of money." "E. Gr. fcy in- 
dorsement on this note, ordered part of the money to be paid to the 



BILLS OF EXCHANGE. 219 

plaintiff. Upon which this action was brought : and a special custom 
amongst merchants was laid in the declaration, according to the plain- 
tiff's case." "Upon a demurrer to this declaration, it was adjudged, 
" that this is a void custom ; because, by means of such division, the 
defendant would be subject to as many actions as the person to whom 
the note was given should think fit ; and this upon a single contract, 
which subjected him to one action only." This warrants what I said, 
" that the original contract must be looked into." Here the original 
contract is a negotiable bill, and the indorsee is in the place of the ori- 
ginal payee. 

The two cases of More v. Manning, and Acheson v. Fountain, serve 
to prove " that there is no such custom of merchants as the defendants 
pretend :" for they could not have been so determined as they were, if 
there had been such a custom of merchants. 

Therefore these judicial determinations of the point are the lex mer- 
catoria as to this question ; for they settle what is the custom of mer- 
chants, which custom is the lex mercatoria, which is part of the law of 
the land. But this finding of the jury in the present case is directly 
contrary to the lex mercatoria so fully settled and established by legal 
adjudications. 

Therefore the verdict ought to be set aside ; but it should without 
costs, for the reasons already specified. 

Per Cur. unanimously. The verdict was set aside, and a new trial 
ordered, but without costs. 



*A BILL MAY BE INDORSED CONDITIONALLY, AND IP SO IN- ^#01 1 T 
DORSED, THE DRAWEE IS BOUND BY THE CONDITION. '' 

ROBBKTSON v. KENSINGTON. 
Jane 22, 1811.— E. 4 Taunt. 31. 

This was an action of assumpsit, and the first count in the declara- 
tion was on a bill of exchange, of which the following is a copy, viz. — 

"Edinburgh, 18th Nov. 1808. £180 sterling. At 45 days after 
date, pay this first of exchange, to the order of Mr. Bobert Bebertson, 
j6180 sterling, value received, which place to account, as advised, W. 
Forbes, J. Hunter and Co." "To Messrs. Kensington, Styan, and 
Adams, Bankers, London." " Accepted, Kensington and Co. Entered, 
J. P. Kaeburn. Indorsed, Edinburgh, 19th Nov. 1808. Pay the within 
sum to Messrs. Clerk and Boss, or order, upon my name appearing in 
the Gazette as Ensign in any regiment of the line, between the 1st and 
64th, if within two months of this date. B- Bobertson. Clerk and Boss. 
J. Tindale. ThomasEyre and Sons. Thomas Nelson. Dudding and Nelson. 
Bank of England." The pkintiff declared as payee, against the defend- 
ants as acceptors. The declaration also contained counts for money had 
and received by the defendants to the use of the plaintiff, for money paid 



220 EOSS ON COMMEECIAL LAW. 

by the plaintiff to the use of the defendants, on an account stated, and 
for interest. 

The plea was, the' general issue. At the trial in this cause before 
Mansfield, C. J., and a, special jury, at the sittings after Hilary 
Term, 1811, at Guildhall, a verdict was entered by consent for the plain- 
tiff for the sum of £180, subject to the opinion of the Court on the fol- 
lowing case : — 

The bill, which was for £180, was drawn at Edinburgh on the 18th 
November, 1808, by Sir William Forbes, J. Hunter and Co., upon the 
defendants, who are bankers in London, payable to the order of ,the 
plaintiff at 45 days date, for value received. The indorsements by the 
plaintiff, and by Clerk and Ross, as above set forth, were made before 
the bill was presented to the defendants for acceptance. The bill was 
P^nio-i delivered to Clerk and Ross, army agents in Edinburgh, being 
i- -I *persons theil employed by the plaintiff to procure for him by 
purchase the commission of Ensign above referred to. The bill, with 
those indorsements upon it, was afterwards presented to the defendants 
for acceptance, and accepted by them in the usual course of their busi- 
ness as bankers. It was afterwards indorsed and negotiated by the other 
persons whose names appear as indorsers, and finally with the Bank of 
England, who discounted it. At the expiration of the 45 days specified 
in the bill as originally drawn, and the days of grace, the defendants 
paid the contents to the Bank of England, who presented it to them for 
payment. The plaintiff, at the time of drawing the bill, paid the full 
value for the same to Sir 'William Forbes, J. Hunter and Co., the draw- 
ers, but did not ask, or obtain, their consent, or that of the defendants, 
the acceptors, to make any alteration in the tenor of the bill by indorse- 
ment, either as to the condition of the payment, or the extension of time. 
The plaintiff's name had never appeared in the Gazette as Ensign in 
any regiment of the line. The question for the opinion of the Court 
was. Whether the plaintiff was entitled to recover ? if he was, the ver- 
dict was to stand ; if he was not entitled to recover, a verdict was to be 
entered for the defendants. 

This case was argued by Lens, Serjeant, for the plaintiff, who con- 
tended, that it was competent for the plaintiff by this special indorse- 
ment to make only a conditional transfer of the absolute interest in the 
bill, which he had purchased for a full consideration, and had vested in 
him by the delivery of the drawer. The defendants, by subsequently 
accepting the bill, had become parties to that conditional transfer, and 
as the condition had never been performed, the transfer was defeated, 
and they became liable, after the expiration of the two months, to pay 
the plaintiff, to whom the property then reverted, the contents of the 
bill, of which none of the indorsers could enforce payment against the 
defendants at the 45 days' end, because they had all received the bill 
subject to the condition, and were bound thereby. He cited Archer v. 
Bank of England, Doug. 638. » 

P3131 *'S'Aei>Aerd:, Serjeant, for the defendant, contended, that it 
L -J was immaterial whether the acceptance was before or after the 
conditional indorsement. The acceptance admitted the hand-writing of 



BILLS or EXCHANGE. 221 

the drawer, bnt it did not mix itself with the conduct of the indorsers : 
it admitted nothing which was on the back of the bill. The whole prac- 
tice of the Courts was accordingly ; for in an action against the acceptor, 
it became unnecessary to prove the hand-writing of the drawer, but it 
was necessary to prove the hand-writing of the indorser. 

The Court gave judgment for the plaintiff. 



A BILL OR NOTE MAY BE TBANSFEREED BOTH BEFORE AND AFTER MATU- 
RITY, BUT IN ENGLAND, IF TRANSFERRED AFTER MATURITY, THE 
HOLDER IS AFFECTED BY THE EQUITIES EXISTING BETWEEN THE ORI- 
GINAL PARTIES. 

I BKOWN v. DAVIES. 

Feb. 5, 1789.-2. 3 T, B. 80. 

This was an action by the indorsee of a promissory note against the 
maker. 

The plaintiff, at the trial before Lord Kenyon at the last sittings at 
Guildhall, rested his case upon the proof of the maker's and payee's 
hand-writing. The note appeared upon the face of it to have been drawn 
on the 6th of October, 1788, payable to Sandal, or order, and to have 
become due on the 13th of November : it had Sandal's indorsement upon 
it ; and had been noted for non-payment. Whereupon the defendant's 
counsel offered to prove these facts : that Sandal having indorsed it in 
blank, delivered it to Taddy, by whom it had been noted for non-pay- 
ment. That on the 6th of December, Sandal, having been paid by the 
defendant, the maker of the note, took it up from Taddy, and afterwards, 
without the knowledge or consent of the defendant, negotiated it to the 
plaintiff. But his lordship, being of opinion that, unless knowledge was 
brought home to this plaintiff, it would make no *difference be- r^qi^T 
tween these parties, rejected the evidence, and the plaintiff had at- -■ 
verdict. 

Le Mesurier moved in this term for a rule to show cause why there 
should not be a new trial, in order to let the defendant into proof of the 
above facts ; and cited the case of Banks v. Colwell, at Lannceston 
Spring Assizes, 1788, before Mr. Justice Buller. That was an action 
by the indorsee of a promissory note, payable on demand against the 
maker. The defendant there was admitted to give evidence that the note 
had been indorsed to the plaintiff a year and a half afterwards ; and to 
impeach the consideration by showing that it had originally been given 
for smuggled goods ; and that payments had been made upon it at seve- 
ral times. But though no privity was brought home to the plaintiff, 
Mr. Justice Buller was clearly of opinion that he ought to be nonsuited ; 
for he said it had been repeatedly ruled at GuUdhall, that wherever it 
appears that a bill or note has been indorsed over some time after it is 
due, which is out of the usual course of trade, that arcumstanee throws 
such a suspicion upon it that the indorsee must take it upon the credit 
May, 1854.— 15 



222 ROSS ON COMMERCIAL LAW. 

of the indorser, and must stand in the situation of the person to whom 
it was payable ; and here it appeared that the consideration was illegal. 
Therefore he nonsuited the plaintiff. The principle of that case cannot 
be distinguished from the present : according to which the plaintiff must 
stand in the situation of Sandal with respect to the defendant, and, con- 
sequently was not entitled to recover. 

Erskine now showed cause, contending that there was no evidence 
offered to show that the plaintiff knew the note to have been satisfied ; 
neither was there any circumstance attending it which might reasonably 
lead a prudent man to suspect that it had ; one or other of which was 
essentially necessary to disqualify the plaintiff from maintaining his ac- 
tion. For he had paid a valuable consideration for the note to the 
original payee in whose hands it might properly be supposed to be. And 
this objection does not lie in the defendant's mouth, whose negligence in 
r«qiK-i not taking up the bill, when he 'satisfied Sandal, had left it in 
L J the power of the latter to deceive an innocent third person. 

Le Mesurier said, in addition to his former argument, that there was a 
reasonable ground of suspicion on the face of the note ; for the plaintiff 
received it after it was due, when it appeared to have been noted. 

Lord Kenton, C. J. — I think this matter ought to be further inquired 
into. It did not strike me at the trial that there was this suspicious 
circumstance on the face of the note ; for if it appeared to have been 
noted for non-payment at the time the plaintiff received it, that ought to 
have awakened his suspicion, and led him to make further inquiries into 
the goodness of the note. 

AsHURST, J. — I think the rule laid down by my brother Buller, in 
the case of Cornwall, is a very safe and proper one ; that where a note is 
overdue, that alone is such a suspicious circumstance as makes it incum- 
bent on the party receiving it to satisfy himself that it is a good one, 
otherwise much mischief might arise. 

Buller, J. — There is this distinction between bills indorsed before 
and after they become due. If a note indorsed be not due at the time, 
it carries no suspicion whatever on the face of it, and the party receives 
it on his own intrinsic credit. But if it is overdue, though I do not say 
that by law it is not negotiable, yet certainly it is out of the common 
course of dealing, and does give rise to suspicion. Still stronger ought 
that suspicion to be when it appears on the face of the note to have been 
noted for non-payment ; which was the case here. But, generally, when 
a note is due, the party receiving it takes it on the credit of the person ~ 
who gives it to him. Upon this ground it was that, in the case of Corn- 
wall, I held that the defendant, who was the maker, was entitled to set 
up the same defence that he might have done against the original payee ; 
and the same doctrine has been often ruled at Guildhall. A fair in- 
dorsee can' never be injured by this rule ; for if the transaction 

r*3161 *^^ ^ ^^'"^ °°^' ^^ ^^^^ ^^'^^^ ^^ entitled to recover. But it may 
L -I be a useful rule to detect fraud whenever that has been practised. 
[Upon Lord Kenyon's appearing to dissent from the generality of the 
doctrine held by Mr. Justice Buller, he proceeded to observe,] My 
lord thinks I have gone rather too far in something that I have said, 



BILLS OP EXCHANGE. 223 

but it is to be observed, that I am speaking of cases where the note has 
been indorsed after it became due, when I consider it as a note newly 
drawn by the person indorsing it. 

Lord Eenyon, C. J. — I agree with that, with the addition of this cir- 
cumstance, that it appears on the face of the note to have been dishon- 
oured, or if knowledge can be brought home to the indorsee that it had 
been so. But I should think otherwise if no notice can be fixed on the 
party ; at least I am not prepared to go that length at present. 

GaosB, J If collusion should be proved between the defendant and 

Sandal, then the former will not be entitled to set up this objection. 
But at present I am- of opinion that a new trial ought to be granted. 

Bule absolute. 



II.— BOBHM V. STEELING. 

Nov. 20, 1'79'?.— E. 1 T. R. 423. 

The plaintiffs declare upon a bill of exchange, dated 17th February, 
1796, drawn by the defendants upon Messrs. Down, Thornton and Co., 
payable to bearer for £2444, 14«., which was refused payment by the 
drawees. It appeared that the house of Muilman and Nantes, having 
agreed to lend the defendants their acceptance, had accordingly on the 
15th November, 1796, accepted a bill of exchange of that date drawn on 
them by the defendants for £2444, 14«., at three months date, which 
would become due on the 18th February, 1797, which bill the defend- 
ants negotiated. And as a counter security, for the purpose of enabling 
Muilman and Nantes to *take up their acceptance when due, the |-,qi-T 
defendants gave them the following check upon their bankers, L J 
upon which the present action was founded : — " Bartholomew Lane, Lon- 
don, ITth February, 1796. Messrs. Down, Thornton, Free and Corn- 
well, pay Mr. Dobson or bearer £2444, 14s. Sterling, Hunters and 
Co." 

Muilman died, and Nantes his surviving partner became a bankrupt 
before the day when their acceptance became due, in consequence of which 
the defendants were obliged to take up their bill drawn upon that house. 
In the meantime, on the 20th of January, 1797, before the death of 
Muilman or bankruptcy of Nantes, they had passed the defendants' draft 
on Down & Co. to the plaintiffs for a valuable consideration, namely, a 
precedent debt, the plaintiffs being at that time ignorant of the trans- 
action between the defendants and Muilman and Nantes. The draft, 
when tendered at Down and Co.'s, was refused payment ; and in a subse- 
quent conversation on the same day between an agent for the plaintiffs and 
one of the defendants, the latter said that it ought not to have been pre- 
sented for payment, as they had paid it on a bill of Muilman and Nantes 
(meaning the acceptance above-mentioned j) but they should wish to pay 
this draft, provided that they could prove the bill under the commission 
against Nantes ; and that he had sent the night before to the plaintiffs to 
desire a meeting in order to accommodate this business, and was sorry 



224 ROSS ON OOMMEEOIAL LAW. 

that they had not met, as an accommodation might have taken pla«e ; 
and if the plaintiffs would prove under the estate of Nantes, they, the de- 
fendants, would endeavour to provide for the payment of this draft. Tllie 
defendants afterwards refused to pay the draft. 

It was contended at the trial, on the part of the defendants, that this 
was like the common case where a person takes a bill of exchange from 
an indorser after it has become due, in which case the indorsee must 
stand in the same situation and subject to the same equities as the person 
from whom he received it, according to the case of Brown v. Davies, 
3 T. E. 80, and Taylor v. Mather there cited. And that as in this case 
Muilman and Nantes could not have recovered against the defendants on 
r*m ST *^'® draft, because the consideration as between *them had failed 
L J by the non-payment of their acceptance, so neither could the 
plaintiflFs recover who had taken the draft from Muilman and Nantes nine 
months after it was due ; which circumstance alone should induce them, 
in common prudence, to have made inquiry eoneerning the occasion of 
the draft being so long outstanding. Lord Kenyon, however, was of 
opinion that it was a question for the jury to decide whether the plaintiffs 
had received this draft bonS, fide, and without knowledge of the circum- 
stances under which M. and N. held it; and if so, he thought, though 
not without some doubt, that the mere circumstance of its being so long 
outstanding at the time, was not sufficient to exonerate the defendants 
from their liability under the circumstances of this case, whereupon the 
jury found a verdict for the plaintiffs. 

A rule had been granted on a former day in this Term, calling on the 
plaintiffs to show cause why there should not be a new trial on the ground 
that in point of law the taker of such a bill or draft, after it is due, must 
Stand or fall upon the title of the person from whom he received it ; and 
that here, as M. and N. could not have recovered on the draft under the 
circumstances, the plaintiff could not have been in a better situation. 

Garrow, Gihhs, Adam, and Park, now showed cause against the rule. 
And first, upon the general question, they denied that there was any 
general rule of law limiting the negotiability of a draft on a banker ; it 
was due at all times, as against the drawer, when the holder thought 
proper to demand payment. It was an appropriation of so much of the 
drawer's money in the hands of the banker to answer the draft whenever 
it should be presented j and a person having given such a draft could 
not, without a breach of good faith, withdraw the fund so appropriated. 
They admitted that the holder, by keeping such a draft in his hands an 
unreasonable time after it was given, took upon himself the risk of the 
banker's responsibility ; but as to what was a reasonable time, it was a 
question of fact for a jury ; but no such question could arise here, where 
the drawees remained solvent, and no loss had accrued to the drawers 
r*3191 ^"^"^ '■^^ laches of the holder. They contended, *further, that 
L -la banker's check was an instrument of negotiability notorious in 
the commercial world, and frequently passed from hand to hand long after 
it bore date. That, strictly speaking, it was not due before it was de- 
manded ; and in that respect it differed from a bill of exchange or pro- 
missory note which was made payable on a particular day. That the case 



BILLS OF EXCHANGE. 225 

of Brown v. Davies, 80, was of this latter description ; and Lord Kenyon 
in that case dissented from the general doctrine laid down by Mr. Justice 
BuUer, that the mere cireumstance of such a note being overdue was 
sufficient to let in evidence of satisfaction as between the maker and the 
person from whom the plaintiff received it, without notice of any fraud; 
but his lordship relied upon a circumstance of suspicion apparent upon 
the face of the note itself, namely, that it had been dishonoured. So 
here, they admitted that if it had appeared upon the face of the draft 
itself to have been a mere counter security, or if any knowledge of the 
transaction as between M. and N. and the defendants could have been 
brought home to the plaintiffs, that might have been a sufficient answer 
to the action. But that these were all circumstances proper for the con- 
sideration of the jury, as was admitted by BuUer, J., in Taylor v. Mather; 
and the jury having decided by their verdict that the plaintiffs were bon^ 
fide holders for a valuable consideration without notice, the Court would 
not disturb their decision. They compared this to the case of the Bank 
of England, or of country banks payable in like manner to bearer, which 
are negotiated in common experience long after they bear date, without 
any objection of this kind having ever been suggested. And they said 
that it would be of material prejudice to paper credit if bonS fide holders 
of such instruments were at all events liable to be turned round upon 
any defect of title in those through whose hands they had passed. But, 
secondly, they contended that the plaintiffs were at least entitled to retain 
the verdict, under the particular circumstances of the case; for it appeared 
that the defendants themselves had issued this draft nine months after it 
bore date, and therefore they were estopped from objecting to its nego- 
tiability on that account. And it was plain from the whole transaction, 
that they intended at the time that M. and *N. might negotiate r^onnn 
it if they pleased, for they negotiated M. and N.'s acceptance for L J 
which this draft was given in exchange. The plaintiffs were therefore 
estopped from contending that this was a fraud upon them, or that it was 
not according to the real understanding of the parties. That this was 
confirmed by the subsequent conduct of one of the defendants; by which 
it appeared before M. and N.'s acceptance became due, they knew that 
their draft had been negotiated to the plaintiffs; and so far from consid- 
ering themselves as not liable to pay it, they actually enga.ged to do so 
if the plaintiffs would prove the amount under N.antes' commission. 
That these circumstances, at all events, took this case out of the general 
rule. 

ErsMne and Criles, eontra, made three questions. 1st, Whether 
Muilman and Nantes could have recovered in this action. 2dly, if 
not, Whether the plaintiffs can be in a better situation than those from 
whom they received the draft ? 3dly, If not. Whether the subsequent 
promise could be of any effect ? First, Muilman and Nantes could not 
have recovered, because the consideration failed on which they had re- 
ceived the draft ; it was given as a counter security for their accept- 
ance, and merely for the purpose of taking that up when it should become 
due. It was therefore contrary to good faith in them to pass it into any 
other hands for any other purpose. Secondly, the plaintiffs cannot be 



226 ROSS ON COMMEROIAIi LAW. 

in a better situation than Muilman and Nantes. It is now estab-. 
lished as a general rule of law, that whoever takes a bill of exchange 
or promissory note after it is due, takes it upon the title of the person 
from whom he received it, and subject to all equities as between such 
person and the party who is liable on the face of the instrument. 
This rule grew by degrees from the necessity of the thing, from prin- 
ciples of public policy and convenience, and to prevent frauds which 
it was scarcely possible to detect in each particular instance. In 
the case of Taylor v. Mather it was said by Mr, Justice BuUer, that 
if there were any circumstances of fraud in the transaction, and the 
instrument came , into the plaintiff's hands after it was due, he 
always left it to' the jury on the slightest circumstance to presume 
that the indorsee was acquainted with the fraud. But between that 
r*^9Ti *'^^^^ ^^^ *'*^ "^^^ °^ Brown v. Davies, a period of near two 
L J years, it was found that so many cases had occurred at Nisi Prius, 
where, although there was much ground for suspicion, it was impossible 
to procure legal proof of the fraud, that the Court considered it better 
for the furtherance of justice, to adopt that as a rule of law, which be- 
fore was considered more as a rule of evidence, namely, that where a 
bill or note was taken after it was due, ihe party should stand in the 
situation of the person from whom he received it, and be taken to have 
notice of all that the other knew concerning it. This rule has since 
been adopted by Lord Kenyon, in a late case of Good v. Coe, at Nisi 
Prius, where the plaintiff had taken the note on which he sued for a 
valuable consideration, three months after it was due ; and it appearing 
that the note had been lost by the true owners, and that the person from 
whom the plaintiff received it had notice of this, his lordship held on 
the principle above mentioned that the plaintiff was not entitled to re- 
cover. Then it was attempted to distinguish this case from those, by 
saying that this was a banker's check, and that such securities are due 
at all times whenever presented. But it is in truth and in legal con- 
sideration a bill of exchange according to the custom of merchants ; it is 
declared upon as such, and could not have been declared on in any other 
manner. And in the next place, the time of its becoming due is within 
a reasonable time after it bears date, and not at any distance of time. 
What that reasonable time is was considered in Metcalf v. Hall, Tr. 22 
Geo. 3, B. K., and in Tindal v. Brown, 1 T. R. 167. In strictness it 
ought to be presented the same day, if there be time and the parties live 
in the same place, or if not, within the banking hours of the next day 
at farthest; if the parties live at a distance, the draft should be sent by 
the first post. But though circumstances may happen to excuse a party 
in this respect of laches, of which the Court and jury must judge, still, 
however, it shows that what shall be considered as a reasonable time is 
not altogether at the discretion of the holder, as the argument on the 
other side assumes j and at all events nine months must be admitted to 
be an unreasonable time. Besides, it is clear that the holder of a bank- 
P3221 ^^'^ check, not presenting it in reasonable time, runs *the risk 
L -I of the banker's solvency ; for if the latter become insolvent, the 
drawer of the check would certainly be discharged by the laches of the 



BILLS OF EXCHANGE. 227 

holder. This differs the case from that of hank notes and other cash 
notes of private bankers, to which it has been compared, by keeping 
which the holder does not risk losing any part of the security by laches, 
there being only the drawers responsible for the payment ; and Lord 
Mansfield said in Heylyn v. Adamson, 2 Burr. 676, that while a promis- 
sory note continues in its original shape, it bears no similitude to a bill 
of exchange, but the resemblance begins when it is indorsed. There is 
another strong distinction between the cases ; for bank notes and other 
like notes are negotiable, and are so considered by the parties ; whereas 
a banker's check is not so considered, and whoever receives it in payment 
takes it on the credit of the person giving it, and not on the intrinsic 
credit of the instrument itself. As to the argument that the draft ought 
in conscience to be considered as so much money appropriated by the 
drawer to the use of the holder in the banker's hands, the same con- 
sideration might apply to save the laches of the holder in general cases 
of bills of exchange. But what the defendants contend for here is, not 
that they were discharged by the mere circumstance of the plaintiffs' 
having taken the draft so long after it bore date, but that in consequence 
thereof the plaintiffs shall be deemed by the rule of law to have had 
notice of the transaction between the defendants and Muilman and 
Nantes ; and that the defendants may set up the same defence in this 
action which they might have done if it had been brought by Muilman 
and Nantes, upon whose credit the plaintiffs took the draft. Thirdly, If 
by law the defendants were discharged from the payment of this draft 
in consequence of the consideration having failed as between them and 
Muilman and Nantes, in whose situation the plaintiffs must stand, then 
the subsequent promise to pay by the defendants, even if it could be 
considered as an absolute one, is void, and cannot give a ground of action, 
as was holden in Blesard v. Hirst, 5 Burr. 2670, and Groodall v. Dolley, 
1 T. R. 713. But besides, it was only a conditional promise, and the 
plaintiffs have not performed the condition required of them. 

•Lord Kenyon, C. J. — The case of Brown v. Davies came p^qnoT 
before me at Nisi Prius, very soon after I took my seat in this L J 
Court; and the grounds on which I then proceeded were such as my 
own reasons suggested to me at Gruildhall, not being then much ac- 
quainted with the practice at Nisi Prius. I then thought that if a per- 
son gave a check on his bankers, and meant to act honestly, he would 
not afterwards alter the state of his accounts so as not to leave a suffi- 
cient sum in his banker's hands to answer that demand, but that so much 
money should at all events be appropriated to the payment of the check j 
and if that were done, no inconvenience could possibly arise to any per- 
son ; and I observe in a case in 1 Lord Baymond, 575, that such was 
Lord Holt's opinion. But when that case was brought before this Court 
on a motion for a new trial, it appeared that there was a rule in such 
cases, that the party taking a bill of exchange after it is due, takes it 
subject to all the equity to which the party from whom he takes it is 
liable. And I do not mean to call that rule in question now ; though in 
that case I grounded my opinion on the particular circumstances of the 
case, it appearing on the face of the bill that it had been dishonoured ; 



228 ROSS ON COMMEROIAI. LAW. 

I thouglit that that distinguished it from the general case, and that dis- 
tinction was not denied by the majority of the Court. However, I do 
not wish to set that question afloat again. 

At the time of this trial I thought that there was a difference between 
bankers' checks and bills of exchange, and that the rule adopted with 
regard to the latter did not apply to the former; but on further con- 
sideration I do not think that that distinction is well founded. But the 
defendants' position, that bankers' cheeks are not considered by mer- 
chants as negotiable instruments, appears most extraordinary ; for this 
very instrument, on which the action is brought, shows the contrary. It 
was made payable to Dobson or bearer, and instead of being given to 
Dobson, to whom it was payable in the first instance, it was immediately 
delivered to those under whom the plaintiffs claim. 

Let us consider the particular circumstance of this case, on which alone 
my opinion proceeds. The proposition on which the defendants rely is, 
fnqnA-t not that the plaintiffs have not given a *valuable consideration 
L J for the check, nor that the bankers on whom the check is drawn 
had not assets in their hands to pay 'it, nor that the plaintiffs when they 
took it conceived any doubt but that the defendants would pay it, but 
that they (the defendants) on the 15th of November, 1796, sent this 
cheek into the world with its own death-wound about it, and that it was 
not negotiable at all, even when it was issued by them ; and after having 
perplexed the world with the confusion of dates occasioned by their own 
act, they now have the audacity to say in a court of justice that, because 
payment was not demanded by the plaintiffs nine months before it was 
even issued by themselves, payment of the bill cannot be enforced at all. 
But this is too gross a fraud to be practised on the plaintiffs, who are 
bonS, fide holders of the bill. The rule established in Brown v. Davies, 
and in the other case there referred to, was framed to exclude fraud, and 
it professed to be founded on grounds of justice; whereas here the de- 
mand is founded in justice, and all the difficulty is occasioned by the 
defendants themselves who issued this bill with the objection of which 
they now wish to take advantage appearing on the face of it : but I am 
clearly of opinion, on principles of law as well as justice, that it is not 
competent to them to take this objection. 

GrROSE, J. — When this motion was first made, I thought it a question 
of great importance, as it appeared to break in upon the rule laid down 
in the cases referred to ; but it now turns out that the particular circum- 
stances of this case take it out of the general rule. To determine that 
the plaintiffs eannot recover would be permitting the defendants to prac- 
tice a gross fraud. 

Lawrence, J. — I agree that this case depends on its own particular 
circumstances, and that it ought not to be governed by the decision in 
Brown v. Davies. It was evidently the intention of the parties that this 
check should be a negotiable instrument; for though it was drawn in 
favour of Dobson or bearer, it was immediately put into the hands of 
Muilman and Co. And when it is considered that it was not issued 
P3251 ^^^^^ *'^^^^ months after it bore date, it could not have been in- 
L -i tended by the defendants that the date of the bill should throw 



BILLS 07 EXCHANOE. 229 

any difficulty on the holder. It was manifestly the intention of the par- 
ties that if Muilman and Co. paid their acceptance, they should be at 
liberty to pass this check to whom they pleased ; and if so, it was not 
necessary for the plaintiffs to inquire hbw Muilman and Co. got posses- 
sion of the check. Therefore as between these parties the rule laid 
down in Brown t. Davies does not apply, though I think it ought to 
obtain in all other cases, and that it is not infringed by a determination 
in favour of the plaintiffs in this case. Bule discharged. 



III. — DOWN V. HALLING. 

June T, 1825.— E. 4 B. & 0. 330. Eng. Com. Law Eeps. vol. 1 0. 

Assumpsit for money had and received. Plea, general issue. At 
the trial before Abbott, C. J., at the London , sittings after last Easter 
Term, the following appeared to be the facts of the case : — 

On the 16th November 1824, the plaintiff's brother drew a check for £50 
upon Sir Peter Pole, Thornton and Co., and delivered it to the plaintiff. 
Between four and five o'clock, on the evening of the 22d of November, 
a woman of respectable appearance came to the shop of the defendants, 
who were wholesale linen drapers and haberdashers in Cockspur Street, 
and puchased a silk shawl and a scarf, the price of which was ^6 lOs., 
and she tendered in payment the cheek in question, dated on the 16th of 
November ; upon being desired to write her name and address on it, she 
said she was an indifferent writer, and at her request the shopman wrote 
it for her. The defendants then gave her the amount of the check after 
deducting the price of the goods purchased. She carried the goods away 
with her. On the 23d of November, between nine and ten in the morn- 
ing, the defendants presented the check *for payment at the r^onft-i 
bankers, and received the amount, and two days afterwards the L -■ 
plaintiff gave notice to the bankers not to pay it. Upon this evidence it 
was objected by the defendant's counsel, that the plaintiff ought to be 
nonsuited, because he had not given any evidence to show how the check 
got out of his hands. 

The Lord Chief Justice overruled the objection, and directed the jury 
to find a verdict for the plaintiff, if they thought that the defendants had 
taken the check under circumstances which ought to have excited the 
suspicion of a prudent man, observing at the same time, that there was 
no evidence to show that the defendants, in taking the note, had acted 
fraudulently ; but the question was. Whether they had not acted negli- 
gently ? The jury found a verdict for the plaintiff. 

Denman, on a former day in this term, moved for a new trial on two 
grounds. The plaintiff can only be entitled to recover the amount of 
this check, on the ground that the check was lost by theft or accident, 
or was obtained from him by fraud. Now, there was no evidence to show 
the manner in which it passed out of the plaintiff's hands. It is con- 
sistent with the facts proved, that the woman who presented it for pay- 
ment may have done so as the agent of the plaintiff. But assuming that 
the evidence in this respect was sufficient, the true question for the jury 



230 ROSS ON COMMEECIAL IiAW. 

was not whether the defendants had acted with due caution, but whether 
they had acted mala fide. It was admitted that there was no fraud, and 
that they had paid a full consideration for the check. The circumstance 
of the check being overdue five days, though calculated to excite suspi- 
cion, is immaterial, for it is not sufficient to warrant an imputation of 
mala fides in the defendants. A party taking a bill, note, or cheeky is 
not bound to take care of the interest of third persons : and if he takes 
it bonS. fide and for a valuable consideration, he is entitled to recover 
upon it, although he did not exercise due caution in ascertaining the 
interest of third persons. It is true, that the mode in which this 
case was presented to the jury is warranted by the decision of this 
r*Qoin *Conrt in Grill v. Cubitt, 3 B. & C. 466, but that is at variance 
1- ^^''^-l with former decisions. 

Abbott, C. J My brothers are perfectly satisfied upon the latter 

point made in this case, but they entertain some doubts whether the 
plaintiff ought not to have given some evidence to show how he lost the 
note ; and, therefore, as to that point, we will consider farther whether 
the rule ought to be granted. 

Batley, J. — I think this case was left to the jury very favourably 
for the defendant. There is no question whatever in the case, if the dis- 
tinction between bills overdue and not due be adverted to. If a bill, 
note or check be taken after it is due, the party taking it can have no 
better title to it than the party from whom he takes it, and therefore 
cannot recover upon it if it turns out that it has been previously lost or 
stolen. Now, a check is intended for immediate payment, and not for 
circulation. It is the duty of the person who receives it to present it for 
payment on the same or the following day, and if he neglects to do so, 
and the parties upon whom it was drawn should become bankrupts in 
the mean time, he must bear the loss. Here the check was drawn on 
the l6th of November, it ought, therefore, in due course, to have been 
presented for payment on the 17th, and the defendant took it on the 22d. 
This is, therefore, just like the case of a bill taken after it is due, and the 
party taking it has no better title than the person from whom he took it, 
and cannot recover upon it. 

HoLROYD, J. — This check must be considered in the same light as a 
bill taken after it is due. Now, it has been frequently held, that a party 
taking such a bill, or note, takes it at his peril. In many of the cases 
where the title to stolen bills or notes has come in question, they have 
been taken before they were due, and then it may have been a proper 
question to submit to the jury, whether they were taken mala fide, 
or bona fide. A check is payable immediately, and the holder of it 
keeps it at his peril, and a person taking it after it is due, takes it also 
at his peril. Now, in this case, the oheci had been due five days at the 
r*3281 *™^ ^^^^ it was taken by the defendants. *That was a eircum- 
l- -I stance which ought to have excited their suspicion. I think, that 
when the defendants took the check, more than a reasonable time for pre- 
senting it for paymenthad elapsed, and therefore, they took it at their peril. 

The case stood over until this day, when the opinion of the Court on 
the other point was delivered by 



BILLS OF EXCHANGE. 231 

Abbott, C. J — ^We have considered the question, Whether it were 
necessary for the plaintiflF in this case to show at what time and in what 
manner the check passed out of his hands ? It was proved that the 
check was given to the plaintiff by his brother. By that delivery the 
property in it vested originally in the plaintiff. It further appears, that 
the ^heck came into the hands of the defendants five days after its date. 
We are of opinion, that an instrument of this nature coming to the hands 
of a party so long after its date, is to be considered in the same light as 
a, bill of exchange overdue ; and in such a case it is incumbent on the 
party who takes the instrument under such circumstances, to show that 
the party from whom he took it had a good title to it. That being so, 
it is not necessary in this particular case to lay down any general rule. 
At the same time, I should feel great reluctance in laying down a general 
rule which would have the effect of requiring proof, which in many cases 
it might be impossible to give. Where a watch is stolen out of a private 
drawer, or a horse is stolen out of a field, it would be impossible for the 
owner to give evidence to show how the theft was committed, and yet, if 
the argument urged on the present occasion were to prevail, in such cases 
it would be absolutely necessary for a party who brought his action to 
recover his own property, to show the mode by which it passed out of 
his hands. Without, however, laying down any general rule, we are of 
opinion that, in this case, the plaintiff having shown the property in the 
check once to have been in him, it was incumbent on the defendants, 
who had taken it after it was due, to show that the party from whom 
they took it had a good title. Bule refused. 



*In Mutford v. "Walcot, 1 Raymond, 574, Holt, C. J., observed, thatr^foqa-i 
he remembered a case where an action was brought upon a bill of'- J 
exchange, and the plaintiflF declared upon the bill — where it was negotiated 
after the day of payment ; and a question was made whether the plaintiff could 
declare upon the bill, or whether he ought to bring indebitatus assumpsit, and 
that he had all the eminent merchants m London with him at his chambers, at 
Sergeants' Inn, in the long vacation, and they all held it to be very common 
and very good practice. 

2. The case of Taylor v. Mather, 3 T. E. 83, was an action by the indorsee 
of a promissory note against the maker. The note was indorsed some time after 
it was due, and there were many circumstances which led the Court and the 
jury to conclude that it was fraudulently obtained, whereupon the verdict was 
found for the defendant. Upon a motion for a new trial, it was refused. Bul- 
ler, J., observed,—" It has never been determined that a bill or note is not 
negotiable after it becomes due ; but if there are any circumstances of fraud 
in the transaction, and it comes into the hands of a plaintiff by indorsement, 
after it is due, I have always left it to the jury, upon the slightest circumstances 
to presume that the indorsee was acquainted with the fraud." The rest of the 
Court concurred in this opinion. 

3. The case of Tinson v. Francis, 1 Camp. 19, was an action of assumpsit 
on a promissory note by the indorsee against the maker. It was proved by the 
defendant that the note was given bynim to accommodate the payee, that it 
remained in the hands of the payee tiU after it became due, and that the payee 
gave it to a third party to be "returned to the defendant, and that that party 
indorsed it to the plaintiff. It was argued for the plaintiff, that he was not 
aware of the circumstances under which the bill had been orginally made, or 



232 ROSS ON COMMERCIAL LAW. 

had come into the hands of the third party, and that he had given to that party 
a ftill consideration for it. The jury found for the defendant. Lord Ellen- 
borough observed,-^" After a bill or note is due it comes disgraced to the 
indorsee, and it is his duty to make inquiries concerning it. If he takes it. 
though he gives a full consideration for it, he takes it upon the credit of the 
indorser, and subject to aU the equities with which it may be encumbered." 

4. A bill or note, payable on demand, is not to be considered as overdue 
without some evidence of payment having been demanded and refused. The 
case of Barough v. White, 4 B. & C. 325, and 6 D. & E. 379, was an action 
by the indorsee of a promissory note made by the defendant for £300, with 
interest, payable to one G. Arnott, or his order, on demand. At the trial before 
Chief Justice Abbott, the defendant objected, that the note being payable " on 
r*S301 demand," it must be treated as a bill overdue *in the hands of the plain- 
^ J tiff, and, consequently that he could maintain no action upon it, and the 
case of Banks v. Colwell, cited in Brown v. Davies, 3 T. R. 8, was cited in sup- 
port of the objection. The Lord Chief Justice overruled the objection, and 
the jury found for the plaintiff, but the point was reserved. A motion was 
thereafter made for a nonsuit, or for a new trial, when the defendant ARGtnED, — 
The note being payable on " demand," it stands on the same footing as a note 
overdue, and consequently no action lies against the maker, as the payee gave 
no consideration for the note, whatever remedy the indorsee may have against 
the indorser. In Banks v. Colwell, tried before Buller, J., it was held that a 
note payable on demand is to be considered overdup ; and Brown v. Davies is 
an authority to show, that where a promissory note, after it was due and had 
been noted for non-payment, was indorsed to the plaintiff, who sued the maker 
upon it, the latter was entitled to go into evidence to show that the note was 
paid on between him and the original payee from whom the plaintiff received 
it. If this be so, then it was unnecessary to show that the plaintiff knew of the 
want of consideration between Arnott and the defendant at the time of the 
indorsement, for as the plaintiff derives title through Arnott, whatever would 
be an answer to an action by the latter, would be equally available against the 
former. Bayley, J., observed, — ^Was this to be treated as a note overdue ? Cer- 
tainly this is not like the case of Brown v. Davies, for there it. was only decided 
that where a party takes a bill or note overdue, he takes it on the credit of the 
indorser ; but in that case there was evidence to show that the note had been 
presented for payment, and dishonoured before it was indorsed to the plaintiff. 
It is said that in the case of Banks v. Colwell, Mr. Justice Buller treated a note 
payable on demand as a note taken by an indorsee after it was due. "We are, how- 
ever unacquainted with all the circumstances of that case. It is very possi- 
ble that in that case there was evidence to show that the note had been pre- 
sented and dishonoured before indorsement. Wherever it appears that a bill or 
note has not been indorsed until sometime after it is due, which shows that 
the transaction is out of the usual course of business, that circumstance excites 
so much suspieioa that it must be considered that he takes on the credit of the 
indorser, and not upon that of the person by whom it appears to be made pay- 
able. But in this case there was no evidence whatever of a demand and refu- 
sal to pay before the indorsement. The note is made payable ' on demand, to 
Arnott, or order, with interest,' which imports that it was not the intention of 
the makers of it that it should be promptly paid, but that it should be in the 
r»Q9ii ^^"ids of Arnott, or of such other persons as should take it from him for 
L J *vali}able consideration until either he or his indorsee should think fit 
to call for payment, or until the maker should find out who the holder was, and 
require him to receive payment." Holroyd, J. — "I think this is not to be 
treated as a note overdue at the time of the indorsement. If a person takes a 
note, payable at a particular time, and that time is past at the period when he 
receives it, he takes it at his own risk. But where a note is made payable, 'on 
demand, with interest,' that imports that it is to continue negotiable until it is 
presented for payment. Here ther-e was no proof that the note was presented 
and dishonoured before it was indorsed to the plaintiff, and consequently the 
objection taken to thB plaintiff's right to recover has no foundation." Little- 
dale, J.^" I think that a proamissory note, ' payable on demand, with interest,.' 



BILLS OF EXCHANGE. 233 

is to be considered a3 a continuing security, and cannot be treated as dis- 
honoured, until it has been in fact presented and dishonoured." 

5. Cheques on bankers ought to be presented for payment immediately after 
they are drawn ; but notwithstanding the case of Down v. Hailing, it may be 
doubted whether they are to be treated as bills overdue. The case of Roths- 
child V. Corney, 9 B. & C. 388, was an action of assumpsit for money had and 
received. The plaintiff had been induced, by means of a fraud, to draw and pay 
away two cheques on his banker, amounting to £1330. Six days after the date 
of the cheques, the defendants, acting bona fide, gave cash for them to a third 
person, who had presented the cheques and obtained payment, but who had 
not given value for them. In an action for the plaintiff to recover back this 
money, it was held that the cheque could not be treated as bills overdue, and 
therefore taken by the defendants at their peril ; but that the real question in 
the cause was, Whether they had acted with due care and caution ? At the 
trial Lord Tenterden left it to the jury to find for the plaintiff, if they thought that 
the circumstances of the case were such as ought to have excited the suspicions 
of prudent men, and that the defendants had not acted with reasonable caution ; 
but otherwise to find for the defendants. The jury found a verdict for the defend- 
ants. A motion was thereafter made for a new trial, on the ground that the jury 
ought not to have found that the defendants exercised diie caution ; and, secondly, 
that Lord Tenterden ought to have told them that the cheques were overdue, and 
that, consequently, the defendants took them at their peril, and could have no bet- 
ter title than the partyto whom they received them, and in support of this ground 
the case of Down v. Hailing, was cited. The rule was refused. Lord Tenter- 
den observed, — " Upon the whole, I am of opinion that we ought not to grant 
a rule in this case. It cannot be laid down as a matter of law, that a party 
taking a cheque *after any fixed time from its date, does so at his peril ; r»Q921 
and, therefore, the mere fact of the defendants having taken the cheques L ■■ 
six days after they bore date, from a person who had not given value for them, 
did not entitle the plaintiff to a verdict. It was indeed a circumstance to be 
taken into consideration by the jury, in determining whether the defendants 
had taken the cheques under circumstances which ought to have excited the 
suspicions of prudent men. If the case were sent to a new trial, the same 
opinion must be presented to the jury ; and as we cannot say that their former 
verdict was wrong, I think that we ought not to disturb it. — ^Bayley, J. — " I 
cannot say that the right question was not left to the jury, nor that their decision 
was wrong, although 1 should have been better satisfied had their verdict been 
the other way." JJittledale, J. — "I am of opinion that the direction given 
to the jury was right, and I am not prepared to say that they did wrong in find- 
ing for the defendants. It has been urged as a matter of law, that a party tak- 
ing a cheque overdue has it with the same title, and no other, as the person 
ftom whom he receives it. But although the rule of law certainly is so with 
respect to bills of exchange and promissory notes, I think it cannot be applied 
to cheques." 

6. An indorsee possesses the same rights as the indorser, and if the latter 
would not have been subject to the equities existing between the original par- 
ties, the indorsee will be entitled to the same privilege. The case of Chalmers 
V. Lanion, 1 Camp. 383, was an action by the indorsee of a bill of exchange 
against the acceptor. One of the grounds of defence was, that the bill had 
been accepted for a debt contracted in a smuggling transaction ; and that 
although it had been indorsed for value before it became due to a bona fide 
holder, yet that it had been indorsed by him to the present plaintiffs after it was 
due. The counsel for the defendant allowed that the first indorsee might have 
sued upon it, but contended that it came disgraced to the plaintiffs ; that they 
took it subject to all the deficiencies under which it had at any time laboured ; 
and that it was now competent to the defendant to give the original considera- 
tion in evidence, in the same manner as if the action had been brought by the 
payee. Lord Bllenborough, however, held that if the plaintiffs received the bill 
from a person who might himself have maintained an action upon it, the circum- 
stance of the indorsement to them having been made after the bill had become 
due was insufficient to let in the proposed defence ; and, on a motion for a new 



234 EOSS ON COMMERCIAL LAW. 

trial, the other Judges of King's Bench declared themselves of the same 
opinion. 



_ *IN SCOTLAND, THE INDORSEMENT OP A BILL AFTER MATURITY 
L J DOES NOT RENDER THE HOLDER LIABLE TO EXCEPTIONS PLEAD- 

ABLE AGAINST THE INDORSER, UNLESS THE BILL BEARS MARKS OP 
DISHONOUR UPON IT. 

I. — WILKIE V. WILSON. 

Not. 30, 1811.— S. 16 F. G. 361. 

This was a suspension of a charge to make payment of a bill payable 
one day after date, accepted by the suspender, and said to have been 
granted without value and as a fund of credit for the drawer. Two 
years after the bill became due the drawer indorsed it to the charger in 
security, and to account of a debt due by him. Three years afterwards 
the charger raised an action against the acceptor for payment of the sum 
in the bill, and obtained decree in absence. 

The acceptor being charged to make payment, suspended the charge, 
on the ground that the bill had originally been accepted without value, 
and that having been long past due before it was indorsed, the indorsee 
was liable to all the exceptions competent against the indorser. 

Pleaded for the Suspender. — Bills of exchange were introduced and 
invested with extraordinary privileges for the benefit of commerce; and 
to entitle them to the enjoyment of those privileges, it is necessary that 
they should be used for their legitimate purpose, and in the prescribed 
and accustomed manner. Accordingly, it has been often found that they 
are not entitled to those privileges when they are indorsed after the term 
of payment is past; 17th July, 1711, Nicholson; 18th February, 1715, 
Murray; 6th February, 1719, Farquharson; 1st February, 1762, Scou- 
gal; and though the statute 1772, extended the privileges of bills to the 
period of six years, it could not be its intention to do so where they went 
out of the common course. 

This is also consistent with the law of England on this point, where 
it is held that an indorsee, in such circumstances, cannot be in bona fide, 
and that the privileges of bills do not apply to transfers made after the 
day of payment; Kyd, p. 120; Brown v. Davies, 3 Term Kep. 80; 

P3341 ^'^^**y' P- ^^^ ' *^^y^^y> P- ^S ; Comyn's Digest, voce Mer- 
L -1 chant, F. 12. As to the ease of Charles v. Marsden, it appears 
to have been a special one, and it stands alone as an authority opposed 
to all the other cases, and to all the writers upon the subject. 

Pleaded for the Charger — It is impossible to figure any reason why 
a bill of exchange should lose its most important privilege, that of pass- 
ing as money by delivery, merely by the circumstance of its having 
become due, especially when express statute has given them all their 
extraordinary privileges for six years. It would be in efi'ect to find, that 
when they became 'due they ceased to be bills — an hypothesis utterly 



BILLS OP EXCHANGE. 235 

inconsistent with every rule of law, and with the constant practice of 
bankers, who currently grant bills at one day's date that pass from hand 
to hand long after they are due. In point of expediency there would be 
no advantage in such a rule ; for the Indorsers will always be secure by 
the want of due negotiation, and the acceptor has himself to blame if he 
allows it to lie over after it is due, and can have no room to complain, as 
he gains a delay in payment; and the bill, after all, whether it is in- 
dorsed before or after it is due, is used only for the purpose for which he 
must be presumed to have granted it, and more particularly so in the 
case of accommodation bills than of any other. 

Accordingly, it is clear law that bills are negotiable though overdue; 
Chitty, p. 109; June 16, 1749, Forbes v. Young; February 27, 1777, 
Couper V. Clark; June 14, 1787, Adam v. M'William; Elliot v. Mackay, 
July 16, 1777; Eobertson v. M'Glashan, February 6, 1787. 

All the cases which have been decided against this doctrine have been 
decided on specialties. In the case of Buchanan, the indorsation was 
without value and pendente lite; in Brown v. Davies the bill appeared 
on the face of it to be dishonoured ; and in Taylor v. Mather there were 
strong circumstances of fraud. But in Charles v. Marsden, 1 Taunton's 
Rep. 224, where the question occurred unencumbered with any special- 
ties, the English judges were clear that of itself the circumstance, that 
a bill was indorsed when past due, was of no consequence in a question 
between the indorsee and acceptor. 

*The Court refused the Bill of Suspension. L "'J 

The Court were almost unanimously of opinion, on general grounds, 
that where there was no circumstance of fraud in the case, and where it 
was not dishonoured on the face of it, a bill of exchange indorsed when 
past due was entitled to all the statutory privileges, and that the indorsee 
was not liable to the same objections as the drawer. 



II. — M'GOWAN V. M'KELLAR. 

Feb. 24, 1826.— S. 4 S. E. 498. 

This was an action by an indorsee against the acceptor of a bill, dated 
1st June, 1818, and payable on 3d December of that year, and which 
was indorsed by the drawer to the pursuer in December, 1823. 

In defence against the action, the defender stated that the bill had 
been accepted by him for the accommodation of the drawer, that in 1822 
a submission had been entered into between them relative to claims 
against each other, and that during the dependence of it the drawer had 
fraudulently indorsed the bill to the pursuer, who resided in the same 
house with him, was married to his sister-in-law, and was engaged in 
trade with him. 

The defender therefore pleaded, that as the bill had been indorsed at 
the distance of five years subsequent to the term of payment, all objec- 
tions which were competent against the drawer were equally so against 
the pursuer. 



236 ROSS ON COMMERCIAL LAW. 

Pleaded for the Pursuer. — The pursuer is an onerous and boni fide 
indorsee, and this can only be disproved by his writ or oath. The bill 
bears no marks of being dishonoured. It therefore preserves its privi- 
leges entire for the period of six years. 

Lord Eldin, Ordinary, "Assoilzied" the defender. 
r*3361 *'^^^ pursuer having reclaimed, the Court " Altered, and de- 
L J cerned in terms of the libel, reserving to the pursuer to prove 
his allegations of non-onerosity and mala fides by the oath of the pur- 
suer." 

Lord Balgrat I have looked at the bill, and I see no mark on it 

to create any suspicion that it was a dishonoured document. If there 
had been anything appearing ex facie to create such a suspicion, this 
might have had an efiect on the question of bona fides ; but as there is 
none, this bill continued to be a negotiable document till it was extin- 
guished by the lapse of six years. M'Kellar must therefore prove his 
allegations of non-onerosity and mala fides by the oath of his opponent. 



THE EQUITIES TO WHICH THE HOLDER OE A BILL WILL BE SUBJECTED 
IN ENGLAND WHO HAS TAKEN IT AFTER MATURITY, ARE NOT ALL THE 
EQUITIES WHICH MAT EXIST BETWEEN THE ORIGINAL PARTIES ARIS- 
ING FROM COLLATERAL TRANSACTIONS, BUT THOSE EQUITIES ONLT 
WHICH ARISE OUT OE THE BILL ITSELF. 

BURKOUGH V. MOSS. 

Feb. 9, 1830.— E. 10 B. & 0. 558. Eng. Com. Law Reps. vol. 21. 

Assumpsit on a promissory note dated the 5th of February, 1826, 
made by the defendant, whereby he promised to pay John Fearn, by the 
name of Mrs. Rachel Fearn, or order, £150, with interest, nine months 
after notice in writing j and indorsed by J. Fearn to the plaintiff. Plea, 
the general issue. 

At the trial before Burrough, J., at the Spring Assizes for Derby, 
1829, it appeared in evidence that the defendant had been employed' as 
an attorney by Mrs. Rachel Harrison, and had lent £200 of her money 
at interest to one Birch, who gave Mrs. Harrison a promissory note for 
it. In July, 1825, Mrs. R. Harrison intermarried with John Fearn, who, 
in February, 1826, requested the defendant to obtain payment of the 
£200 from Birch. The defendant said. Birch was a client of his, and 
P^nniy-i *that he did not wish him to be pressed for the money; and, in 
L -I order to prevent Fearn from suing Birch, he (Moss) paid £50 on 
account of the note, and gave his own note for £150, and made it pay- 
able to Mrs. R. Fearn, nine months after notice. On the 21st of April, 
1826, J. Fearn gave the defendant a written notice to pay off the note 
at the expiration of nine months from that time. Moss, at the expira- 
tion of the time, paid £50 and the interest then due, but no more; and, 
in March, 1827, J. Fearn and his wife both indorsed the note to the 



BILLS OF EXCHANGE. 237 

plaintiff, who advanced the £100 on it, andcommenced this action against 
Moss. 

The defendant claimed a right to set off a sum of £51 alleged to have 
been due to him from Mrs. Fearn before her marriage, £28 for business 
transacted for Fearn since the marriage, and £15 said to have been paid 
on account of the note, besides the £bO and interest before mentioned ; 
but the jury found that this sum of £15 was not paid on account of the 
note. 

The learned judge directed the jury to find a verdict for the plaintiff 
for the amount due on the note, and gave the defendant leave to more to 
reduce the damages, if the Court should think that either of the sums of 
£51, jfi28, or £l&, ought to be allowed. A rule nisi was obtained for 
that purpose in Easter Term, 1829, and at the sittings in Banc before 
this Term. 

Balguy and N. R. Clarke showed cause. — The defendant had no right 
to set off either of the sums of £51 or £28. The sum of £15 was dis- 
posed of by the jury. The £51 was a debt due from the wife dum sola. 
The note, although in form given to Mrs. Fearn, was in law given to her 
husband, and enured to his benefit. The defendant was indebted to him 
on the note, and if he (Fearn) had sued, the debt due from the wife 
before the marriage could not have been set off. Then as to the sum of 
£28. If the action had been brought by Fearn, no doubt it might have 
been set off; but the right of the defendant to avail himself of that claim 
in this action rests on the supposed applicability of the rule of law, that 
the indorsee of a bill or note, when overdue, takes it subject to all its 
equities. But *that is inapplicable, for two reasons: first, there r^oqaT 
was nothing on the face of the note to show that it was overdue L J 
at the time when the plaintiff became indorsee ; and, secondly, the right 
of-set-off in this case between Fearn and the defendant was wholly colla- 
teral to and independent of the note transaction, and the rule applies only 
where the right of set-off or other equity arises out of the note transac- 
tion itself. None of the decisions, Brown v. Davies, 3 T. K. 80 ; Boehm 
v. Sterling, 7 T. R. 423 ; Charles v. Marsden, 1 Taunt. 224, warrant a 
broader rule than that ; and although, in Brown v. Davies, Buller, J., 
stated that he had ruled at Nisi Prius, in a case of Banks v. Colwell, 
that the maker of a promissory note being sued by a person who became 
indorsee after it was due, was entitled to set up the same defence that he 
might have done against the original payee, the defence then in question 
arose out of the very transaction in which the note was given, and went 
to the consideration for the note. The right of set-off now insisted on 
depends on the Statute of set-off, and that only applies between the par- 
ties who have mutual demands. It would be very hard to involve the 
plaintiff in the investigation of accounts between third persons. [Bat- 
ley, J. — In Collenridge v. Farquharson, 1 Stark. 259, the state of such 
accounts was examined.] That is true, but it was in order to see what 
sum the bill was originally intended to secure. 

Adams, Sergeant, contra. — This is an attempt to evade the Statute of 
set-off, which will never be available against the holder of a note if he 
can, by indorsing it when overdue, give the indorsee a right independent 

May, 1854.— 16 



2S8 ROSS ON OOMMEEOIAL LAW. 

of the set-off. In this case the demands for £51, and £28, might have 
been set off if Feam had sued on the note. The sums due on the note 
on the one haind, and for thbse demands on the other, were mutual debts. 
If Mrs. Fearn had surviteid her husband, she might have sued on the 
"note, and then it is clear that the debt due from her before marriage 
might have been set off. So also if Feam and his wife had joined in 
bringing Enaction on 'the ndte^ the debt due from her before marriage 
might have been set off; and as the money received would enure to the 
benefit of the husband, the debt due from him might also have been set off. 
pooQ-. Biit the *indorsee of this note, taking it when overdue, stands 
L J in the same situation, for the indorsement was by both husband 
and wife. [BaVIiEY, J. — That, in legal 'effect, was the indors^inent bf 
the husband only.] Philliskirk v. Pluckwell, 2 M. & S. 393, shows that 
husband and wife may join in an action on a note given to the wife dur- 
ing her coverture ; and if so, a debt due from her before marriage ought 
to be allowed to be set off. 

Batlet, J On behalf of the defendant it has been insisted, that 

'the defendant is entitled to set off two sums, one of which, £51, was due 
to him from Mrs. Fearn before her marriage. As to that, I am of opitt- 
ion that he lias not a right of set-off. The action was brought on a note 
givdh to Mrs. Fearn during' her coverture, not by a person who was her 
debtor before her marriage, but by a party who came in aid of the 
debtor. The form of the security gave the husband a right to treat it as 
joint property or as several J and if he chose to treat it as several, he 
might deal with it as his own, 'and the consequence of his so treating it 
would be, to let in by way of set-off to any claim by him, any debts due 
from him. If, on the other hand, he elected to treat it as a joint pro- 
perty of himself and his wife, in her right, he might let in debts due 
froin her in her own right, but it is clear that both classes of debts could 
not be let in. It appears that in the present case he elected to treat the 
note as his separate property, for he indorsed it over to the plaintiff. 
That mode of dealing with it leads to the same consequences as if the 
note had been given to' him alone; and, consequently, the debt due from 
^his wife before her marriage cannot be set off. As to the other sum of 
£28, due from Fearn alolie, I should wish to consider the case further 
before I give my opinion; for, altho'ugh it might have been set off had 
'Fearn sued On the note, yet the oases have not yet gone the length of 
establishing that such a set-off, not arising out of the bill or note trans- 
action, can be made available against an indorsee, even when the bill or 
note is overdue at the time of the indorsement . 

LiTTiiDALE, J.-^Supposing the Statute of set-off to apply to this 
P^„ - j^-j case, (which I think it does not,) it is clear that the debt *due 
L -i from Fearn can alone be set off; for nothing beyond that could 
have been set off had he brought an action on the note. If he had 
eufed jointly with his wife, I do not think it by any means clear that the 
debt due from her dum sola could have been set off. 

Parke, J. — ^When the question as to the set-off was first mentioned, 
I thought that it must be allowed. But I now entertain doubts, for 
no decision has yet gone to that extent. If there is an agreement either 



BILLS OF EXCHANGE. 239 

express or implied, affecting the note, that is an equity which attaches 
upon it, and is available against any person who takes it when overdue ; 
but it does not thence follow that a right depending entirely on the Sta- 
tute of set-off is applicable to such a state of things. The result of the 
contract entered into by the maker of this note is, that the husband 
might, if he thought fit, give his wife an interest ; or he might, as was the 
fact, dissent, and make the note his own. If therefore any set-off is to be 
allowed, it must be confined to the debt of ^28, contracted by him after 
the marriage. 

Cur. adv. vult. 

The judgment of the Court was now delivered by 

Baylet, J, — This was an actbn on a promissory note made by the 
defendant, payable to one Feam, and by him indorsed to the plaintiff 
after it became due. For the defendant it was insisted, that he had a 
right to set off against the plaintiff 's claim a debt due to him from Feam, 
who held the note at the time when.it became due. On the other hand 
it was contended, that this right of set-off, which rested on the Statute 
of set-off, did not apply. The impression on my mind was, that the de- 
fendant was entitled to the set off; but, on discussion of the matter with 
my Lord Tenterden and ray learned brothers, I agree with them in think- 
ing, that the indorsee of an overdue bill or note is liable to such equities 
only as attach on the bill or note itself, and not to claims arising out of 
collateral matters. The consequence is, that the rule for reducing the 
damages in this case must be discharged. 

Rule discharged. 



*THE INDORSEE OF A BILL OR NOTE, ALTHOUGH NOT OVERDUE, r^qii-i 
WHO HAS NOTICE AT THE TIME OF THE INDORSEMENT OF A 
CLAIM BY THE ACCEPTOR OR MAKER AGAINST THE DRAWEE OR PAYEE, 
IS AFFECTABLE BY SUCH CLAIM, ALTHOUGH NOT ARISING OUT OP THE 
BILL OR NOTE ITSELF. 

GOODALL V. RAY. 

Trinity Term, 1835.— E. 4 Dowl. P. 0. T6. 

Adams, Sergeant, and Amos, showed, cause against a rule nisi, 
obtained by N. Clarke, for referring back this cause to the arbitrator, 
with directions to him to order a verdict to be entered for the defendant, 
or to reduce the damages to £22, 10s. The cause was referred by an 
order of Nisi Prius to a gentleman at the Bar, with power to him to 
direct for whom and for what sum the verdict should be finally entered, 
and to state any special matters on his award. The award made in pur- 
suance of that order was in these terms : — 

" I, the said arbitrator, do award, order, and adjudge that the verdict 
be finally entered for the plaintiff, damages £Y!1, 10s. over and above 
:fi270 paid into Court, and that each party shall bear his own expenses 
of attending the arbitration, and shall pay the costs of this my award 



240 ROSS ON COMMERCIAL LAW. 

equally between them. And I do further state the following special cir- 
cumstances : — The action was brought by the plaintiff as indorsee of a 
promissory note, dated 25th March, 1830, whereby the defendant pro- 
mised to pay to one B. B., or his order, on demand, £352, for value re- 
ceived, with lawful interest for the same ; the defendant pleaded, that 
the plaintiff had not sustained damages to a greater amount than £270, 
paid into Court, and gave notice to the plaintiff to prove the consideration 
for the indorsement. The note was given for a valuable consideration, 
and was a distinct and separate transaction in itself, and independent 
of any collateral considerations or dealings between the parties. On 
the 5th of July, 1831, plaintiff advanced to B. B. the sum of £150; 
on the 29th January, 1833, the further sum of £100, on the deposit of 
the above note ; but the note was not indorsed to the plaintiff until, as 
after stated, on the 16th August, 1833. The plaintiff had notice that 
B. B. was indebted to the defendant in a sum exceeding the amount of 
r*!?d9T *^^^ ^°^ ^^^ interest upon which the action was brought. The 
>- J defendant did not dispute the plaintiff's lien to the extent of £250, 
and interest, nor did the plaintiff assert it to any further extent. After 
this period, B. B. indorsed the note to the plaintiff. In respect to the 
£250 advanced, and interest, the plaintiff would be entitled to j622, 10s. 
over and above the sum paid into Court. At the time of bringing the 
action, B. B. was indebted to the plaintiff as well as to the defendant in 
sums respectively exceeding the amount of the note and interest.'' 

The question upon this award was, Whether the plaintiff, having had 
the note indorsed to him after notice that the payee was indebted to the 
maker to a larger amount, independent of the note, than its amount, could 
recover upon it, notwithstanding any supposed equity which the defend- 
ant might have upon it ? It was contended, that the plaintiff was entitled 
to recover ; for the change which had taken place was not such an equity 
as would deprive the plaintiff of his right, as the transaction with respect 
to the bill was found by the arbitrator to be separate from all others 
between the parties. This was not like the case of an indorsement after 
the note became due ; for as the note was payable on demand, it could not 
be due until it was demanded; but no demand had been found by the 
arbitrator. The present case was analagous to that of Burrough v. Moss, 
10 B. & C. 558 ; the second part of the marginal note of that case 
was in these terms, " the indorsee of an overdue promissory note is liable, 
in an action against the makqr, to all equities arising out of the note trans- 
action itself; but not to a set-off in respect to a debt due from the indorser 
•to the maker of the note, arising out of collateral matters." In the pre- 
sent case, the arbitrator had found that the transaction with respect to 
the note was independent of all other transactions between the maker and 
the payee. In that case, Mr. Justice Bayley said, " On discussion of 
the matter with my Lord Tenterden and my learned brothers, I agree with 
them in thinking that the indorsee of an overdue bill or note is liable to 
Buoh equities only as attach on the bill or note itself, and not to claims 
arising out of collateral matter." 

P^„ .„-. The only difference between that case and the present *was, 
L -I that it did not there appear whether the plaintiff had notice of 



BILLS OF EXCHANGE, 241 

the claims between the original parties, independent of the note. But 
according to the language of the court in that case, such knowledge 
was immaterial. The plaintiff had a right to advance to the full amount 
of the note, although he might know that other claims existed between 
the maker and payee. Next as to the previous cases, none of them were 
inconsistent with the view which was now taken. In Brown v. Davies, 
3 T. R. 80, the marginal note was, " where a promissory note has been 
indorsed to the plaintiff after it became due, who sues the maker upon it, 
the latter is entitled to go into evidence to show that the note was paid 
as between him and the original payee, from whom the plaintiff received 
it." There Lord Kenyon said, in speaking of the note, " If it appeared 
to have been noted for non-payment at the time the plaintiff received it, 
that ought to have awakened his suspicion and led him to make further 
inquiries into the goodness of the note." There the note was overdue, 
here it was not. The principle of the decision in that case was, that if 
a party takes an overdue promissory note, he must inquire what are the 
equities upon that note before he takes it; but that cannot make it 
necessary for him to inquire into matters independent of the note. In 
Boehm and Others v. Sterling and Others, 7 T. R. 423, the marginal 
note was, " where the drawers of a banker's check, issued nine months 
after it bore date, upon a consideration which afterwards failed, as be- 
tween them and the persons to whom they delivered it, they cannot be 
permitted to object this circumstance in an action brought by a subse- 
quent holder for a valuable consideration and without notice, though, by 
the general rule, any person receiving a negotiable instrument after it is 
due, is deemed to>have taken it upon the credit of the person from whom 
he received it, and subject to the same equities as between him and the 
parties sued on such instrument." There the Court would not even 
allow the equities on the note itself to attach. This case supported the 
previous doctrine, which showed, that the disposition of the Courts was 
to limit and not to extend the equities on the note itself. The case of 
CoUcnridge v. Parquharson was confirmatory of the same principle. In 
Barrough v. White, 6 D. & R. 379; *and 4 B. & C. 325, the r^^^^-^ 
marginal note was, "where in an action by the indorsee against L J 
the maker of a promissory note payable with interest on demand, the 
plaintiff having proved that he gave value for it, the defendant tendered 
evidence of declarations made by the payee, when the note was in his 
possession, that he, the payee, gave no consideration for it to the maker: 
held that this evidence was inadmissible, as the plaintiff could not be 
identified with the payee, and the note could not be treated as overdue 
at the time of the indorsement." That case suflGiciently showed that the 
promissory note could not be considered as overdue. On the authority 
of these cases it was contended that the present rule ought to be dis- 
charged. 

Goulbum, Sergt., and N. Clarke, in support of the rule, submitted 
that the case of Burrough v. Moss, was distinguishable from the present. 
In that case, it did not appear that any notice of the state of the accounts 
between the maker and payee had been given to the plaintiff. But in 
the present case he had received such a notice previous to his making 



242 BOSS ON OOMMEROIAIi LAW. 

the advances concerning which the present contest arose. There, the 
question was, Whether the mere fact of the note being oyerdne at the- 
time of indorsement was sufficient ground for inferring notice to the in- 
dorsee of the state of accounts between the original parties to the note ? 
There it was taken for granted, that if the plaintiff had' notice he can be- 
in no better situation than the person who originally took it. In the case 
of Brown v. Davies, already cited, it appeared that the knowledge of the 
note being overdue was clearly conveyed tO' the indorsee, from the fact 
of the noting for non-payment appearing on the face of the instrument. 
There, Mr. Justice Ashhurst said, "I think the rule laid down by my 
brother Buller, in the case in Cornwall, is a very safe and proper one ; 
that where a note is overdue, that alone is such a suspicious circumstance 
as makes it incumbent on the party receiving it to satisfy himself that it 
is a good one, otherwise much mischief might arise/' The case referred 
to by Mr. Justice Ashhurst was mentioned- in the note to the ease of 
Brown v. Davies. The name of the case was Taylor v. Mather. That 
_,„..-. was an *action by the indorsee of a promissory note against the 
L J maker. The note was indorsed some time after it was due, and 
there were many circumstances which led the Court and jury to conclude 
that it was fraudulently obtained j whereuipon a verdict was found for th& 
defendant. Wpon a motion for a new trial, it was refused upon the 
merits; and Mr. Justice Buller at the same time said, "It has never 
been determined that a bill or note is not negotiable after it becomes 
due ; but if there are any circumstances of fraud in the transaction, and 
it comes into the hands of the plaintiff by indorsement after it is due, I 
have always left it to the jury, upon the slightest circumstance to pre- 
sume that the indorsee was acquainted with the fraud." The same 
principle was pointed out in Boehm and Others v. Sterling and OtherS) 
already cited. In Tinson v. Francis, 1 Camp. 19, the marginal note 
was, "although the bonS. fide holder of a promissory note, made without 
consideration, himself gave a full consideration for it, yet if he took it 
after it was due, from an indorser who had given none, he cannot main- 
tain an action against the maker." The principle of all these cases was^ 
that th^ indorsee of a promissory note could not recover against the 
maker where no consideration had been given, if he had knowledge of 
such want of consideration. Here, the payee of the note, at the time 
be indorsed it, stood in the same situation as if no consideration had 
been given for it, and with a knowledge of that feet, the plaintiff had it 
indorsed to him. He therefore came within the principle affecting the 
indorsee of an overdue bill of exchange. 

CoLERiDQi:, J — According to your argument, however, it make» no 
difference whether the bill is overdue or not. 

Goulbum, Sergt., and iV. Ch/rke, admitted that such was the effect 
of the argument. The question in the case now was. Whether, under 
the circumstances disclosed in the award, the present plaintiff was enti- 
tled to recover? If the action had been brought on the promissory note 
by B. B. himself, the defendant would have had a good defence by a 
plea of set-off. Then could the present plaintiff, who had taken the not© 
after it was due, with a knowledge of B. B.'s liability to the defendant, 



BILLS OF EXCHANGE. 243 

♦recover upoa the note ? It was not suggested that any moral r#Q4fl-i 
fraud existed on the part of the plaintiff, but according to the L J 
finding of the. arbitrator, legal fraud, existed on his part, and therefore he 
was not entitled to recover. Cur. adv. vult. 

Coleridge, J. — In this case a rule was obtained, calling on the plain- 
tiff to show cause why this cause should not be referred back to the same 
arbitrator to direct a verdict to be entered for the defendant, or to reduce, 
the damages to £22, 10«. The arbitrator has directed a verdict to be 
entered for the plaintiff for £171, 10s. beyond £270 paid into Court, 
and under a power reserved to him has found the following special 
facts : — The plaintiff sued as indorsee of a, promissory note for j6352, 
and lawful interest, dated 25th March, 1830, and made. by. the defendant 
payable on demand to B. B., or order. The plea denied any damages 
beyond £270 (paid into Court,) and the defendant gave notice to prove 
the consideration for the indorsement. The note was given for a valu- 
able consideration, and was a separate transaction, independent of any 
other dealings between the parties. On the 5th of September, 1831, 
the plaintiff advanced to B. B. i6150, and on the 29th of January, 1833, 
j£100, on the deposit of the notej on the 16th of August, 1833, notice 
was given to the plaintiff that B. B. was indebted to the defendant in a 
sum exceeding the note and interest ; and at that time the defendant did 
not dispute the plaintiff's lien to the extent of iS250, and interest, nor 
did the plaintiff claim anything beyond. After this, B. B. indorsed the 
note to the plaintiff, and at the time of the action brought, B. B. was 
indebted both to the plaintiff' and the defendant in sums exceeding 
respectively the amount of the note and interest. 

Upon these facts, the plaintiff contends, that the note being payable 
on demand, and no demand having been found, cannot be considered as 
having been overdue at the date of the indorsement ; and '^hat even if it 
be so considered, he is bound only by such equities between the payee 
and maker as arise upon the note itself; that a set-off between these 
parties *arising from the altered state of their general accounts c^oa't-i 
is not such an equity, the note having been given upon a sepa- ■- J 
rate transaction, and remaining specifically unpaid. For this latter point, 
the case of Burrough v. Moss is relied on, in which the distinction was 
taken between the claim of the maker of a note to avail himself of a 
defence founded on the general state of the accounts between himself 
and the payee, and his right to avail himself of circumstances, such as 
actual payment, release, &c., which affect directly the demand on the note 
itself. The grounds for this distinction, when considered with reference 
to the circumstances before the Court, are sound and obvious; and the 
case appears to decide no more than this, that, from the mere fact of the 
note being indorsed when overdue, the indorsee is only put to inquire, 
and therefore shall only be presumed to know the state of the transac- 
tion as to the note itself, and is only identified with the party under 
whose title he takes it, to that extent. The maker, therefore, was not 
allowed to transfer that set-off, which would have been available for him 
against the payee, arising from the general debt due from the payee to 



244 KOSS ON OOMMEROIAL LAW. 

him, to meet the demand which the holder had against him on the in- 
strument itself. 

In the present case it may be taken in favour of the plaintiff, that the 
note was not overdue at the date of the indorsement ; and it must be 
taken against him, that he had notice of the state of accounts before he 
made any of the advances now in dispute. The intended effect of that 
notice was, that, as between the payee and maker, the note was no longer 
available, that as between them that which was tantamount to payment 
had taken place; and, therefore, that any further advance upon the note 
must be on the credit of the payee only. 

It is but reasonable that this notice should have the effect intended, 
and although the law is averse to anything which goes to fetter the ne- 
gotiability of- bills of exchange or promissory notes, I am not aware of 
any principle in it which will prevent the notice having operation here. 
This is not the case of a note or acceptance originally given for accom- 
modation, and without consideration, in which case the accommodation 
r«Q48n maimer or acceptor may have no right by notice to prevent a 
L J *party from giving consideration, and suing on the note or bill ; 
because such notice is a direct contravention of his original undertaking. 
Here, the note for all beyond the sums advanced on the deposit may .be 
considered a new note, made for a valuable consideration, and satisfied, 
before the second holder has given any consideration for its indorsement; 
it is therefore no more in contravention of its original purpose, by a 
notice to restrain its further circulation, than it would have been if, after 
payment, it had remained by accident or fraud in the hands of the ori- 
ginal payee, and he were contemplating to re-issue it. The same prin- 
ciple which in the case of overdue bills without actual notice limits the 
liability of the acceptor to the extent of the knowledge which the law 
presumes, must, as it appears to me, in the case of actual notice, whether 
the bill be overdue or not, limit the liability to the extent of the actual 
notice. The fact of indorsement is not material on this question, the 
holder had a right to insist on that, and it was the duty of B. B. to give 
it, for the purpose of enabling the holder to reap the fruits of his undis- 
puted lien. 

Upon the grounds, therefore, that the maker might lawfully give the 
notice in question, that it was given in due time, and that the plaintiff 
must be taken to have made every subsequent advance upon the credit 
only of the indorser, I am of opinion that this award ought to be 
reformed by reducing the damages by the amount of such advances. But 
the arbitrator has found that £22, 10s. are due to the plaintiff in respect 
of interest on the prior advances ; to the extent of those advances it was 
not disputed that the plaintiff's claim was good ; and it is not therefore 
now open to the defendant to contend, if under any circumstances such 
contention could be successfully made, that any notice of such lien to 
him was necessary; and if the plaintiff's claim be good to that extent, 
it will be good also for this accruing sum. I think, therefore, the ver- 
dict should only be reduced, not set aside. 

Bule absolute accordingly. 



BILLS 01' EXOHANOE. 245 

*1. In Scotland, all equities existing between the original parties to ii|*54n-] 
bill of exchange are sustained in a question with these parties, but are '• -" 
not allowed to prejudice onerous indorsees. In the case of Plumber v. Hous- 
ton, July 13, 1706, the acceptor offered to prove against the payee that the bill 
was accepted as the price of a subject sold by the payee to him ; and that as the 
subject had not been delivered, payment of the bill, which was granted as the 
price of the subject, could not be demanded, that being causa data causa non se- 
cuta. The pursuer answered, — Whatever may be the cause of the bill, there 
can be no inquiry after acceptance, bills being as current as money ; and to 
admit such objections would be such an interruption of, and obstruc- 
tion to trade, that it would confound all commerce. No exception, therefore, 
although it were compensation, can be admitted to interrupt the currency of 
bills of exchange, for a biU is repute as a bag of money, and goes from hand to 
hani fictione hrevis manis, and serves as a fund of credit, like bank notes. The 
Court sustained the relevancy of the defender's plea. The lords thought it 
might be a stop to the currency of bills to offer to prove the cause of granting 
if they were once made over and indorsed to strangers or third parties ; but 
that as the present case was between the first creditor in the bill and the accep- 
tor, it seemed relevant to prove against him its cause by his oath. 

2. Where, however, an indorsee is not in bona-fide in taking the bill, he will 
be held affectable by equities existing between the original parties to it. The 
case of Corrie v. Aitkin, July 27, 1785, was an -action by an indorsee for pay- 
ment of a bill against the acceptors. The defenders contended that the indor- 
sation had been fraudulently devised between the drawer and indorsee in order 
to preclude their just defences, and they offered a proof of facts sufficient to 
show that this was the case. The Court allowed the proof offered. It was ob- 
served on The Bench, — "Although bills of exchange, when in the possession of 
fair and onerous indorsees, are like bags of money, liable to no exception 
arising from the fraud of anterior holders, yet a collusive transference, such as 
is here alleged, ought not to be attended with the same privileges." 

3. In the case of the British Linen Company Bank v. Souter, Nov. 18, 1824, 
the Bank claimed as indorsees of a promissory noj;e granted in place of a bill 
payable to a party as attorney of the defender. After the bill became due, the 
attorney applied to the Bank agent to discount it. This he declined to do, as 
the bill was past due, but, at the attorney's request, he proposed to the drawer 
he should grant a new bill for the same amount, and enclosed a promissory note 
for him to sign payable to the drawee's attorney or his order, but omitting to 
engross, as in the original bill, his character as attorney *for the defend- 1-^^ „,(,-■ 
er. The note having been signed, was thereafter discounted with the '^ J 
bank agent. The attorney having become bankrupt, a multiplepoinding was 
raised for the purpose of having it determined whether the money due on the 
promissory note was payable to the defender or to the bank. The Bank con- 
tended that although the original bill was payable to the defender's attorney, or 
his order as attorney for the defender, yet he might validly have indorsed it, 
and that they were therefore in bona-fide to discount the promissory note. 
Lord Mackenzie, Ordinary, found that the act of changing the biU payable to 
the defender's attorney, as attorney for him, for a promissory note payable to 
the attorney himself, was done with the knowledge and advice, and through the 
instrumentality of the agent of the Bank ; that the Bank was responsible for 
this act of their agent, and therefore that it could not take any advantage from 
the act ; and that the sum in the promissory note must still be regarded as if it 
had stood on the original bill. The Bank having reclaimed, the Court 
"Adhered." 



246 ROSS ON COMMERCIAL LAW. 



EHE HOLDER OP A BILL PArABLE TO BEARER, OR PAYABLE TO ORDER, 
AND INDORSED IN BLANK, 'WHO TBANSSERS IT BY DELIVERY MERELY, 
AND WITHOUT INDORSEMENT, IS NOT LIABLE ON THE BILL, AND IS NOT 
IJEEMED TO ITNDERTAJiE ANY OE THE OBLIGATIONS OF AN INDORSER. 

FENN V. HARBISON. 
J,nne 14, ITop.— B, 3 T. E. V57. 

This was an action for money lent, money paid by the plaintiffs to 
the use of the defendants, and money had and received by the defendant^ 
to the use of the plaintiffs. A bill of exchange was drawn by Livesay 
and Go. on Gibson and Johnson, in favour of one Norman, which came 
by indorsement to the defendants ; who, being desirous of getting it 
discounted, employed Francis Huet for that pjirpose, telling him to carry 
ife to market and get cash for it, but that they would not indorse it. F. 
Huet applied to his brother James Huet to get- the bill discounted, 
informing him that it was the defendant's bill, and that though they did 
not chpOse to indorse it, yet he added (as a reason of his own) that, as 
r*q»in tlieir number was on the bill, it * was equivalent to an indorse- 
L ■^J meat ; and that he (F. Huet) would indemnify him if he indorsed; 
the bill. On an application by James Huet to the plaintiffs, and on his 
indorsing the bill, without wHch indorsement he could not have got the. 
bill discounted, the plaintiffs disBpunted it ; chiefly relying on the credit 
of Gibson and Johnson, for at that time they did not know that the 
defendants had had any concern with the bill. Afterwardsi, however, on 
the failure of Gibson and Johnson, the plaintiffs, having heard that thO; 
bill had passed through the defendants' hands, applied to them for pay- 
ment, who at first refused, but afterwards promised to take it up ; and 
on their not doing so, this action was brought to recover the amount of 
it. 

Lord Kenyqn, before whom the cause was tried^ after reporting the 
above facts, said that he had told the jury, that if they were of opinion 
that James Huet had made himself answerable to the plaintifib, as agents 
fb]^ the defendants, that was a sufficient considera,tion for. the defendant^' 
promise ; and that they were of that opinion, and found a verdict for the 
plaintiffs. 

A rule having been obtained to show cause why the verdict should 
not be set aside,, and anothei: trial granted, on the ground that this was 
nudum pactum, 

JSearcrofl and Evshine now showed cause against it ; contending that 
the promise made by the defendants was binding on them, whether con- 
sidered as given by them when under a moral obligation J.o pay, or as 
having received a legal and valuable consideration for it. As to the first, 
it cannot be denied but that so much money belonging to the plaintiffs 
has got into the pockets of the defendants, for which they have received 
no consideration. This, therefore, was a sum which in conscience and 
morality the defendants were bound to pay to the plaintiffs ; and that 



BILLS OS EXOHANQE. 247 

alone, thougt there were strictly no legal debt, is a sufficient considera- 
tion on which to raise a promise. But, 2dly, There was also a legal and 
valuable consideration ; because the plaintiffs had a right of action against 
James Huet, who might have resorted to the defendants for an indemnity 
for an act done as their agent. For as James Huet, in putting his 
indorsement on the bill, acted by the *direction of his brother, nnrn-, 
who was the avowed agent of the defendants, even admitting L J 
that F. Huet exceeded his authority, yet as he acted within the scope of 
his employment, which was to raise money on the bill for the defendants, 
they must be bound by his acts ; and they have a remedy over against 
him. But it does not appear that F. Huet did exceed his authority, for 
the only restraint imposed on him by the defendants was not to indorse 
in their names, because they did not wish that their names should appear 
on the bill, but they did not mean to restrain him from indorsing the 
bill, or any other person for him, provided the money could not be raised 
on any other terms ; and that turned out to be the case. And whatever 
doubt there might have been originally whether either of these agents 
had exceeded his authority, yet the defendants, by their subsequent pro- 
mise, have recognised and adopted the acts of their agent, and made- 
themselves immediately answerable to the plaintiffs. 

Mingay and Law, in support of the rule, insisted that the defendants 
were under no moral or legal obligation when they made the promise in 
question, and consequently that it was not binding. The argument of 
the plaintiff proceeds on a false foundation ; for it supposes that Francis 
Huet was not circumscribed in his authority, whereas the very reverse 
of that appears from the facts reported. The substance of the authority 
given by the defendants to F. Huet was, that he should sell the bill, for 
that they would not make themselves liable either on the bill by their: 
indorsement, or by any other circuitous mode. The very circumstance 
of their refusing to indorse the bill negatives any idea that they meant 
to make themselves responsible through the indorsement of any other 
person for them. As therefore the agent exceeded his authority, the 
principals (the defendants) are not bound, any more than the owner of a 
horse would be by the warranty of his servant, whom he authorized to sell 
it with an express direction not to warrant. Neither were the defendants 
under any moral obligation to pay ; for the plaintiffs took the bill on 
the credit of Gibson and Johnson, and of J. Huet, and at that time they 
did not even know that the bill had passed through *the hands r^ocq-i 
of the defendants. Therefore the plaintiffs have no more equity L J 
than the defendants. 

Lord Kenyon, C. J This is a question of great nicety ; and during 

the trial of the cause I entertained considerable doubts upon the subject, 
and even at this moment the utmost that I can say is, that the leaning 
of my mind is in favour of the verdict. It is extremely clear, that if 
the holder of a bill of exchange send it to market without indorsing his 
name upon it, neither morality nor the laws of this country will compel 
him to refund the money for which he has sold it, if he did not know at 
the time that it was not a good bill. If he knew the bill to be bad, ife 
would be like sending out a counter into circulation to impose upon the 



248 ROSS ON COMMERCIAL LAW. 

world, instead of the current coin. In this case, therefore, if the defen- 
dants had known the bill to he had, there is no doubt but that they 
would have been obliged to refund the money. I agree with the defen- 
dants' counsel, that Francis Huet was circumscribed in his authority j 
and if that circumstance would protect the defendants, they would not 
be answerable in this action. But I am of opinion that that circum- 
stance is not a decisive answer to this action ; for I very much doubt 
the case alluded to by the defendants' counsel, of the servant warranting 
the horse against the direction of his master ; to such a case I think the 
maxim, respondeat superior, applies, and the principal has his remedy 
against his agent for misconduct. But the difficulty I meet with is this, 
this is not an action wherein Francis Huet calls on the defendants for 
an indemnity ; if it were, I admit that, as he exceeded the authority of 
his principal, he could not recover against him. But here, James Huet, 
who is an innocent man, and not involved in the misconduct of his bro- 
ther, Francis Huet, has a claim on the defendants. When James Huet 
received this bill, he was informed that it came from the defendants ; 
and on his asking why they had not indorsed it, he was told by Francis 
Huet that they had done that which was equivalent to it, for that their 
number was on it ; in this indeed he was mistaken. However, he told 
James Huet that he should be safe, and that he would guarantee him, 
on which the latter indorsed his name on the bill, and thus indorsed, it 
r^oKA-i *igo' into the hands of the plaintiffs. Then it is clear that the 
L -J plaintiffs might resort to James Huet for payment; and that 
brings it to this question. Whether James Huet, who took the bill from 
Francis Huet, knowing him to be the agent of the defendants, has not a 
right to call on the defendants, who constituted Francis Huet their 
agent, although that agent exceeded his authority ? I think that he has. 
And if so, that is a good consideration for the promise made by the 
defendants. 

AsHHTTRST, J. — Although I have had doubts upon this case, I am of 
opinion that the defendants are not liable. If Francis Huet had been 
the general agent of the defendants, I admit that they would be charge- 
able with his acts; but it appears from the evidence that he was consti- 
tuted their particular agent with a circumscribed authority. And that 
brings it to the case put at the bar of the sale of a horse ; where I take 
the distinction to be, that if a person keeping livery stables, and having 
a horse to sell, directed his servant not to warrant him, and the servant 
did nevertheless warrant him, stiU the master would be liable on the 
warranty, because the servant was acting within the general scope of his 
authority,' and the public cannot be supposed to be cognizant of any 
privaite conversation between the master and servant, 10 Mod. 109 ; but 
if the owner of a horse were to send a stranger to a fair with express 
directions not to warrant the horse, and the latter acted contrary to the 
orders, the purchaser could only have recourse to the person who actually 
sold the horse, and the owner would not be liable on the warranty, be- 
cause the servant was not ' acting within the scope of his employment. 
And that is like this case. Here, F. Huet, who was employed by the 
defendants to get the bill discounted, was expressly directed by them 



BILLS OF EXCHANGE. 249 

not to indorse it, which was equivalent to saying that they would not 
pay it, I agree that F. Huet would be liable to James Huet, either as 
for money paid to his use, or on the express promise to guarantee : but 
there it stops; for, as to the defendants, he paid the money in his own 
wrong, because the authority which they gave was exceeded. Therefore, 
on the whole, I think that the defendants are neither liable on account 
of the indorsement made by James Huet, nor on their *subse- |-;^qccT 
quent promise to pay, because, not being under any obligation, <- J 
it was nudum pactum. 

BcLLBE, J. — I confess that this does not appear to me to be a case of 
much difficulty; for, when the facts are understood, the consequences 
follow of course. The result of my opinion is, that, as between these 
parties, the plaintiffs have no conscience or equity, and that the defend- 
ants are not under any legal or moral obligation to pay the amount of 
this bill. I consider this action as a new attempt ; and it is difficult to 
say to what extent it may be carried if it be encouraged. In the case of 
a bill of exchange, we know precisely what remedy the holder has if the 
bill be not paid; his security appears wholly on the face of the bill 
itself; the acceptor, the drawer, and the indorsers, are all liable in their 
turns, but they are only liable because they have written their names on 
the bill. But this is an attempt to make some other persons liable 
whose names do not appear on the bill, and that under circumstances 
very alarming to mercantile houses through whose hands bills of 
exchange pass. For even indorsers, whose names are on the bill, can 
only be called on after notice of non-payment, and without delay. But 
if these defendants be answerable, by what rule are we to be guided ? 
what notice is to be given to them? are they to be liable at any distance 
of time ? I think this is a dangerous attempt, and ought to be discou- 
raged ; for in all cases arising on bills of exchange, there should be some 
limitation of time, beyond which none of the parties should be called on. 
In this case, the defendants said in the most express terms that they 
would not make themselves liable on the bill ; for when they told F. 
Huet that they would not indorse it, it was the same as if they had told 
him in terms to sell it. When a person refuses to indorse a bill, it can- 
not be implied that he means to make himself liable on the bill, much 
less in a more extensive way than if he had indorsed it. The authority 
of F. Huet was circumscribed ; he was mistaken in what he said to J. 
Huet ; he did not even desire J. Huet to act on the authority of the 
defendants; he thought that the defendants would be liable; but that 
was merely his opinion. F. Huet, therefore, did not pledge the names 
of the *defendants in any way whatever; consequently, they p^„p.-.-| 
were under no obligation whatever to promise, and it is nudum L -I 
pactum. I agree with my brother Ashhurst, that there is a wide dis- 
tinction between general and particular agents. If a person be appointed 
a general agent, as in the case of a factor for a merchant residing abroad, 
the principal is bound by his acts. But an agent, constituted so for a 
particular purpose and under a limited and circumscribed power, cannot 
bind the principal by any act in which he exceeds his authority ; for 
that would be to say that one man may bind another against his con- 



250 ROSS ON COMMERCIAL LAW. 

sent. There is a class of cases which have been thought to bear extremely 
hard upon masters, who are held liable for the misfeasance of their ser- 
vants in driving their carriages against those of third persons ; but those 
cases have been determined on the ground that it must be presumed that 
the servants have acted under the orders of their masters. But suppose 
a master ordered his servant not to take his horses and carriage out of 
the stable, and the latter went in defiance of his master's orders; there 
is no authority which says that the master shall be liable for any injury 
done to another by such an act of the servant; though indeed, if the 
master had. ordered the servant to go a particular journey, and in the 
course of it the latter did an injury to some third person, the authorities 
which have been determined say that the master is liable in that case. 

GrROSE, J As I have had great doubts on this case, I am glad to 

have heard the opinions of my brothers before I deliver my own. The 
question is, Whether at the time when the defendants made this promise 
it was nudvim pactum, or whether there were any legal consideration 
for it? In the first place, this is a new attempt to make the defendants 
liable as if they had indorsed the bill, when in fact they refused to 
indorse it. The substance of the conversation between the defendants 
and E. Huet was this; they said, "Take the bill, get it discounted, and 
sell it, but we will not be answerable to the holder of the bill in any way 
whatever." If that be so, undoubtedly they were not liable to the 
holder; and then the subsequent promise is without consideration, unless 
X*V\'T\ so^^thing passed at the *time when it was made to raise a consi- 
L J deration. But nothing is stated to show that the defendants re- 
ceived any benefit, or that the plaintiffs renounced any advantage. A 
strong circumstance in this case is, that at the time of the original trans- 
action the credit of Gibson v. Johnson was much relied on. Then there 
is no pretence to impute fraud to any of the parties ; and if not, the 
morality follows the law. I consider this as a new and dangerous 
attempt to make the defendants liable, and that even beyond the extent 
to which indorsers are ; and if we were to make them liable, it would be 
difficult to say what law attaches on them. As to the distinction between 
a general and a particular agency, I think it was pointedly put by my 
brother Ashhurst, with whom I entirely agree. Rule absolute. 



1. The case of the Bank of England v. Newman, 1 Raymond, 442, was an ac- 
tion by the Bank against the payee of a bill of exchange which they had dis- 
counted to him. The bill was payable to defendant or hearer. The defend- 
ant came to the Bank and asked how much money they would give him 
for the bill. They took the bill, and gave him so much money, allowing so 
much for discount. On the failure of the drawer the Bank sued the defendant 
for the money which he had received for the bill, as for so much money lent by 
them. ■ The jury found for the plaintiff, against the opinion of Chief Justice 
Holt, and a new trial was thereafter granted. Chief Justice Holt observed, — 
"If a man has a bill payable to him or bearer, and he delivers it over for 
money received without indorsement of it, this is a plain sale of the biU, and he 
who sells it does not become a new security. But if he had indorsed it he had 
become a new security, and then he had been liable upon the indorsement." 

2. The case of Fydell v. Clark, 1 Esp. 447, was an action of assumpsit for 
money had and received. The defendants were trustees of the insolvent estate 



BILLS OP EXOHANOE. 251 

of certain bankers, and the action was brought to recover from them a sum of 
£4300, as paid to these bankers under a mistake. These bankers had dis- 
counted certain promissory notes to the amount of £8000, drawn by a brother 
and ^partner of the plaintiff. The brother having died, the plaintiff paid ritqcD-i 
the £8000 due on the promissory notes, believing at the time that his '- J 
brother had received the whole amount of the notes in money from the bankers. 
It afterwards appeared that they had only given him other notes and biUs in 
lieu of the notes drawn by him ; that they had not indorsed these notes and 
bills ; and that they turned out bad to the amount of £4300. The plaintiff was 
non-suited. Lord Kenyon observed, — "If in the discount of the notes the 
plaintiff's brother took the bills and notes in question, he must be bound by it. 
The bankers parted with them supposing them to be good, and he took them 
under the same impression. Having taken them without indorsements, he has 
taken the risk on himself. They were the holders of the bills, and by not in- 
dorsing them have refused to pledge their credit to their validity; and the 
plaintiff's brother must be taken to have received them on their own credit only. 
The action cannot be supported." 



WHERE THE HOLDER OP A BILL TRANSFERS IT IN PAYMENT OP A DEBT, 
ALTHOUGH BY DELIVERY MERELY AND WITHOUT INDORSEMENT, HE 
CONTINUES LIABLE POR THE DEBT IP THE BILL IS NOT PAID, PRO- 
VIDED IT HAS BEEN DULY NEGOTIATED. 

I. — OWENSON V. MORSE. 
Nov. 24, 1196.— E. 1 T. B. 64. 

Trover for some articles of plate. At the trial at the last Winchester 
Assizes it was proved that on the 2d of April, about six o'clock in the 
evening, the plaintiff went to the defendant's shop at Southampton, and 
agreed to purchase the goods in question of the defendant, a silversmith, 
at a certain price ; and wishing to have his arms engraved on them, the 
defendant sent for one Seed, who usually engraved for him, to engrave 
the arms, and who was directed by both parties to bring back the arti- 
cles to the defendant, who was to pay for the engraving. 

The plaintiff at the time of the agreement paid the price of the goods 
in notes of Messrs. Shaw, who kept a bank at Southampton. Before 
this hour in the afternoon, Shaw's house was shut up for the day; and, 
in consequence of the failure of *a house in London, Staples and ri^ocq-i 
Co., at which these notes were payable, the house of Messrs. <- -^ 
Shaw never opened again; and Staples and Co., and Messrs. Shaw, were 
afterwards declared bankrupts. Seed having engraved the plate, brought 
it back on the next day (Sunday) to the defendant, who paid him for his 
work. 

On behalf of the defendant it was objected, that under these circum- 
stances the plaintiff was not entitled to recover, because the goods had 
never been delivered to him or any person for him. Seed being the ser- 
vant of the defendant and not of the plaintiff, and the plaintiff not having 
paid for the goods : but Mr. B. Thomson, before whom the cause was 
tried, suffered the plaintiff to take a verdict for the amount of the goods, 
reserving liberty to the defendant to move to set it aside and to enter a 
nonsuit, if this Court should be of opinion^ that the plaintiff was not enti- 



252 ROSS ON OOMMEECIAIi lAW. 

tied to recover. And a rule having been obtained on a former day for 
that purpose, 

Gibbs and Pell now showed cause against it. 1st, The goods were 
delivered to the plaintiff; or, 2dly, he paid for them; and in either case 
the plaintiff is entitled to retain the verdict. First, They were delivered 
to Seed ; and a delivery to him for the purpose of engraving the plaintiff's 
arms on them was in law a delivery to the plaintiff. The contract of the 
sale was complete ; by that the property of the goods in question was vested 
in the plaintiff, and the mere circumstance of the notes not being afterwards 
paid could not revest the property in the defendant, there being no pre- 
tence to impute fraud to the plaintiff. The sale transferred the property 
to the plaintiff, and the right of property carried with it the right of pos- 
session. The goods had been so far delivered to the plaintiff, that accord- 
ing to the case of Lickbarrow v. Mason, 2 T. R. 83, and other decisions 
on this subject, there was an end of the defendant's right to stop the 
goods in transitu. Secondly, There being no fraud in this case, and the ■ 
plaintiff not knowing that the notes were invalid, as the defendant took 
them in payment, and did not accept them specially and on condition 
only that they should be paid, he became a purchaser of the notes.-' In 
r«qfim ^•^'^^ ^' Mundall, 12 Mod. 203, Salk. 124, *S. C. Anonymous, 
L **°"J 12 Mod. 408, Anonymous, ib. 517, Bull. N. P. 277, and Ward 
V. Evans, 2 Ld. Eaym. 980, a distinction was made between those cases 
where a note is given at the time of the contract in payment for goods 
sold (as the present case is) and those where it is given in payment of a 
preceding debt ; and in the former it is said to be a purchasing of the 
note. But even if these notes were not taken as payment for the goods 
sold, the defendant cannot treat this mode of payment as a nullity; but 
he may sue the plaintiff either on his contract for goods sold and deli- 
vered, or on the notes. 

Burrough and Dumford, in support of the rule, were stopped by the 
Court. 

Lord Kenton, C. J. — This is an exercise of ingenuity on the part of 
the plaintiff. It is an unjust attempt by him to take from an honest 
tradesman certain goods which the latter meant to sell to him on receiv- 
ing a fair price for them ; and the question now is. Whether the defend- 
ant shall be compelled to give them to the plaintiff without being paid 
for them ? To be sure, if the law were with the plaintiff, we could only 
lament it; but the law and justice of the case are clearly in favour of 
the defendant. • If the defendant had agreed to take the notes as pay- 
ment, and to run the risk of their being paid, that would have been con- 
sidered as payment, whether the notes had or had not been afterwards 
paid; and that is all that is proved by the oases that have been cited; 
but without such agreement ; the giving of such notes is no payment. 
Consider what were the facts in this case ; the plaintiff went to the 
defendant's shop to purchase the goods in question ; the price was agreed 
upon; the goods were not to be delivered then, but were to remain to be 
engraved at the defendant's expense ; and while they continued in that 
situation, according to all the cases that have been determined on the 
subject of stopping goods in transitu, they were only in transitu, for 



BILLS OF EXCHANGE. 253 

there had been no complete delivery to the plaintiflf. It afterwards 
turned out that the price totally failed, the notes not being paid ; and 
yet it is contended by the plaintiff that he may retain this verdict; he 
does not pretend that the justice of the •case is with him, but |-±QRn 
he is intrenched in a point of law, and may recover the goods in L J 
question, and compel the defendant to bring another action against him 
for the price of them. But I am most clearly of opinion that there was 
no final delivery of the goods to the plaintiff; that as long as they, were 
in the hands of the engraver who was employed by the defendant, they 
were at the most only in transitu, and the price not being afterwards 
paid, that the defendant had a right to retain them. 

Grose, J. — This case has been argued on behalf of the plaintiff as if 
the goods in question had been sold and delivered to him ; if they had 
been delivered to him, the property would have vested in him, and he 
might have recovered the value of them in trover. But the fact is other- 
wise ; the goods were left either in the possession of the defendant or of 
the person whom he employed to engrave them ; they never were deli- 
vered to the plaintiff. I think that under these circumstances the de- 
fendant could not recover the value of these goods in an action for goods 
sold and delivered, though, perhaps, he might have declared as for goods 
bargained and sold without a delivery. The justice of the case is also 
with the defendant ; the plaintiff went to the defendant's shop under pre- 
tence of buying these goods for ready money ; that which he gave as 
money turned out to be worth nothing ; and therefore it would be unjust 
that the plaintiff should take the goods without paying the price that he 
had agreed to pay for them. 

Lawrence, J When the plaintiff went to the defendant's shop, the 

understanding of the parties was, that if the defendant would let the 
plaintiff have the goods in question the latter would give him notes which 
would be paid when presented; but it turned out that the defendant 
never could obtain the money for the notes ; and therefore there was 
clearly no payment. Then it was contended that the goods were deli- 
vered to the plaintiff, but there is no pretence to say that Seed was the 
servant of the plaintiff; on the contrary, he was the servant of the defend- 
ant, and without overturning all the *cases on the question of r-^oaq-t 
stopping goods in transitu, we cannot suffer the plaintiff to retain <- J 
this verdict. Eule absolute. 



II.— TAPLEY v. MARTENS. 

Jan. 31, 1800 E. 8 T. R. 451. 

This was an action of debt on a charter-party, between the plaintiff, 
the master of the brig Hero, and the defendant, the freighter, for a voy- 
age from London to Ancona, and from thence to Venice. The plaintiff 
covenanted that he would receive and take on board a certain cargo of 
pilchards, and proceed to Ancona, and there deliver the cargo agreeably 
to the bill of lading; in consideration whereof, the defendant cove- 
nanted that he would load and ship on board the said pilchards, &c., and 
pay, or cause to be paid, to the said master or his order, freight at 

May, 1854.-17 



254 ROSS ON OOMMEEOIAL LAW. 

Ancona, on a delivery of the cargo according to the bill of lading, at the 
rate of H Leghorn dollars per hogshead. The breach assigned in the 
declaration, after averring a delivery of the cargo at Ancona agreeably to 
the bill of lading, was non-payment of £661, 10s. Sd. for the freight, &o. 
The defendant pleaded payment according to the terms of charter-party, 
and issue having been joined thereon, a verdict was taken for the plain- 
tiff, subject to the opinion of the Court, on the following case : — 

On the 20th of November, 1795, the plaintiff sailed with the Hero, 
having the cargo of pilchards on board, and proceeded direct to Ancona, 
and there delivered to one S. M. Acquabona, the correspondent of the 
defendant at that place, and the consignee of the pilchards, which were 
to be delivered there, five hundred hogsheads of pilchards, (being such 
part of the cargo as was destined to Ancona,) according to the terms and 
conditions of the charter-party. The freight of the five hundred- hogs- 
r*Rfi^1 ^^^^^ of pilchards so delivered, amounted to £661, 10s. Sd. The 
L -I plaintiff addressed himself to Acquabona as the *correspondent 
of the defendant at Ancona; and Acquabona was directed by the defen- 
dant there (he, Acquabona, being then indebted to the defendant in 
more than the amount of it) to pay the freight. The plaintiff, whilst he 
was delivering the cargo to Acquabona, applied to him to settle for the 
freight, as he, the plaintiff, wished to remit some money to his owners in 
England ; and said he should want about £500 of it for that purpose. 
Thereupon Acquabona sent to him, by his broker, a bill of exchange for 
£500, drawn by Acquabona upon the defendant; and the plaintiff, see- 
ing that the bill was drawn upon the defendant, was quite satisfied with 
it, and accordingly took and remitted it to England ; but if it had been 
drawn upon any other person, he would have made inquiry before he took 
the bill. The remainder of the sum due for freight at Ancona was 
afterwards paid at Venice. On the 13 th of April, 1796, after the deli- 
very of the cargo, which was destined to Ancona, the plaintiff and Ac- 
quabona settled an account current, in which the bill for £500 was 
included. The bill so drawn on the defendant by Acquabona was duly 
presented for acceptance ; but it was not accepted by the defendant, and 
it remains unpaid. Before the bill became due Acquabona became insol- 
vent ; and then was, and now is, indebted to the defendant in more than 
j9500. The question for the opinion of the Court is. Whether the 
plaintiff can recover from the defendant the £500 for which the bill 
drawn by Acquabona was given ? 

Park for the plaintiff. — The defendant failed in proving that which he 
undertook to prove, payment of the freight due on the charter-party ; the 
bill, by means of which he endeavoured to establish that proof, not 
having been paid. If the defendant himself had given this bill, which 
was afterwards dishonoured, it clearly would not have been considered as 
payment : then the circumstance of the bill>4iaving been given by Acqua- 
bona, who was the servant or agent of the defendant,, cannot vary the 
question. The plaintiff could not know that Acquabona was indebted to 
the defendant at that time ; and that he had no right to draw upon him. 
At all events, this cannot be considered as payment so as to support the 
issue. If the defendant had intended to avail himself of the bill as taken 



Bins OF EXCHANGE. 255 

*by the plaintiff in satisfaction of his debt, he should have rtnnA-, 
pleaded it, according to Kearslake v. Morgan, 5 T. R. 513. ' L J 

Giles for the defendant. — The facts stated in the case support the 
issue — which was, that the defendant had paid the freight, &c., according 
to the charter-party. By the terms of the covenant, the plaintiff was to 
be paid at Aucona; and, therefore, if he had chosen, he might have 
insisted on payment in money before he delivered the cargo, and it was 
his own laches not to do so, for which he, and not the defendant, ought 
to suffer ; but instead of taking the freight in money from the consignee, 
as he should have done, (the defendant having directed his consignee at 
Ancona to pay the freight there, and having furnished him with funds 
for the purpose,) the plaintiff, for his own accommodation, applied to that 
consignee for a bill to remit to his owners in England. The plaintiff, by 
this transaction, gave personal credit to the consignee ; which he should 
not have done, if he had wished to resort to the defendant afterwards. 
As the plaintiff chose to take the bill in question, instead of money, for 
his accommodation, it is payment as between him and the defendant. 
This is most like the case where a master sends his servant to market to 
buy goods for him, and furnishes him with money for that purpose; 
when, if the tradesman will part with the goods upon the credit of thq 
servant, he does it at his own risk. 

Lord Kenyon, C. J. — This is a very clear case. The plaintiff in this 
cause, who took the defendant's goods on freight, was to perform the 
duty that resulted from that situation, and he was to receive from the 
defendant a certain sum for the carriage of the goods ; he carried them 
and delivered them to the defendant's correspondent at Ancona, pursuant 
to the bill of lading. When at Ancona, he, not knowing any thing of 
Acquabona, though the defendant knew Acquabona, for he sent goods to 
him on credit, applied to this consignee for payment, who gave him a 
bill of exchange that turned out to be of no value. If the fact had been, 
as supposed in argument by the defendant's counsel, that the consignee 
had been ready to pay in money, and the plaintiff had taken this bill for 
his own *accommodation, there would have been some weight in r^oaii-i 
the argument; but the fact was otherwise. The case states, that L J 
the plaintiff applied to Acquabona, "to settle for the freight;" but it 
does not from thence follow that he applied for payment by means 'of a 
bill of exchange. Money would have been of more value than a bill, 
either at Ancona or any other port in Italy : or if the plaintiff had been 
guilty of any negligence after he had taken the bill, in not endeavouring 
to enforce payment of it, that might have been an answer to the present 
demand : but this bill was drawn on the defendant himself, which might 
have deluded the most cautious man ; it was a payment in the usual 
mode of payment in the commercial world. The plaintiff has been guilty 
of no neglect; and the question is. Whether this can be considered as 
payment of the plaintiff's debt? I think not. All that is required of 
an agent is, that he shall use common prudence. Here the plaintiff did 
use common prudence : the defendant, by sending the goods to the con- 
signee at Ancona, accredited him there. I am therefore clearly of opinion 
that this bill cannot be considered as payment of the plaintiff's demand, 



256 ROSS ON COMMERCIAL LAW. 

and that the defendant ia now liable on the charter-party to pay the 
amount of it. 
The rest of the Court were of the same opinion. 

Per Curiam. Postea to the plaintiff. 



1. In the case of Blaekburne, ex parte, 10 Ves. 204, goods had been sold, to 
be paid for by bills at three months, which were delivered by the vendees to the 
vendors, but not indorsed by them. The drawers and acceptors, as well as the 
vendees, having become bankrupt after the bills were due, the vendors were held 
entitled to prove their debt under a commission against the vendees. Lord Eldon, 
Chancellor, observed, — " I take it to be now clearly settled, that if there is an an- 
tecedent debt, and a bill is taken without taking an indorsement, which bill 
turns out to be bad, the demand for the antecedent debt may be restored to. It 
has been held, that if there is no antecedent debt, and A. carries a bill to B. to 
be discounted, and B, does not take A.'s name upon the bill, if it is dishonoured 
r*^fifi1 *there is no demand, for there was no relation between the parties except 
L J that transaction, and the circumstance of not taking the name upon the 
hill, is evidence of a purchase of the bill. In a sale of goods, the law implies a 
contract that those goods shall be paid for. It is competent to the party to 
agree that the payment shall be by a particular bill. In this instance it would 
be extremely difficult to persuade a jury, under the direction of a Judge, to say 
an agreement to pay by bills was satisfied by giving bills, whether good or bad. 
The bills were only a mode of paying the debt of £3000. If they are not paid, 
the original de]Dt, ai-ising out of the contract for goods sold and delivered, 
reipains. It is clear the creditor still holding the bills cannot resort to that 
original contract. In general cases, where the bill is not paid, if there is not 
bankruptcy, the creditor must come immediately upon the bill dishonoured, 
saying, he cannot procure payment, and desiring to have payment ; and then 
he^ might maintain an action for goods sold and delivered." 

2. In Scotland in the case of Harrisons v. Chippendale, Dec. 9, 1794, the 
pursuer claimed against a bankrupt estate in virtue of bills delivered to him by 
the bankrupt, but which were neither drawn, accepted, nor indorsed by him, and 
the debtors in the bills had also become bankrupts. The trustee on the 
estate objected to the claim, on the ground that a party who discounts a bill 
trusts solely to the credit of those whose names are upon it, and that when a 
person delivers a bill without indorsing it, he does so from his wishing to keep 
himself free of the obligation of recourse. The Court held that no claim lay on 
the biU^, but that the debt for which the bills were granted might be proved 
vtliunde. 



WHERE A BILL IS TRANSrERRED TO A PARTY IN PAYMENT OE A DEBT, 
AND THE TBANSFERREE IS GUILTY OF LACHES, THE BILL, ALTHOUGH 
NOT PAID, OPERATES AS A SAXISEACTION OE THE DEBT. 

CAMIDQE V. ALLBNBY. 

Hilary Term, 182T.— E. 6 B. & 0. 373. Eng. Com. Law Eepg. vol. 13. 

Assumpsit. The declaration contained counts for goods sold and 
delivered, and the common money counts. Pie?., non assumpsit. At 
the trial before Hullock, B., at the York Lent Assizes, 1826, a verdict 
was found for the plaintiff for sS24, subject to the opinion of this Court 
on the following case: — 



BILLS OF EXCHANGE. 257 

*ThiB action was commenced to recover the sum of £24, i-*qfi7i 
alleged to be due from the defendant to the plaintiff for a quan- •- J 
tity of corn sold and delivered by the plaintiff to the defendant at York, 
in the morning of Saturday the 10th day of December, 1825. On the 
same day, at three o'clock in the afternoon, the defendant delivered to 
the plaintiff at York, and the latter then and there received as and for a 
payment of the price of the corn, four promissory notes for £6 each, 
and four such notes for £1 each, of the bank of Messrs. Dobson and 
Son, bankers at Huddersfield, in the county of York. The notes were 
in the following form, and the defendant's name was not written upon 
them : — 

"No. Huddersfield Old Bank, £5. 

"I promise to pay the bearer on demand £5 value received, 1st 
day of July, 1823. 

" Entered, &o. For John Dobaon and Sons, 

" £5. « "W. Dobson." 

At eleven o'clock in the forenoon of the same 10th of December, Dob- 
son and Sons stopped payment, having on the same morning and up to 
that hour paid all demands made upon them. They never afterwards 
resumed their payments, and shortly afterwards became bankrupts, and 
the plaintiff never received any part of the amount due on the notes. 
Huddersfield is distant from York about forty miles, and from Laythorn, 
the plaintiff's residence, fifty-two miles. At the time when the above 
notes were paid by the defendant to the plaintiff, neither of them knew 
that Dobson and Sons had stopped payment or were insolvent. The 
plaintiff never circulated the notes, nor did he ever present them to Dob- 
son and Sons, the makers, for payment ; but on Saturday, the 17th of 
the same month of December, the plaintiff required the defendant to 
receive back the notes, and to pay him the amount of them, which the 
defendant then and ever since has refused to do. 

Dodd for the Plaintiff. The plaintiff is entitled to recover the price 
of his corn, unless he has by laches made the notes *hi3 own. r-itoao-i 
It will be contended that he has doiie so, first, by not having pre- L J 
sented the notes for payment; secondly, by not having offered to return 
them to the defendant earlier than he did. But presentment for payment 
was not necessary in this case, because the defendant was not a party to 
the notes, and cannot, under the circumstances, be damnified by the 
neglect to present them. This case differs from the several cases where 
bankers' notes having been taken before the bankers had stopped, pre- 
sentment has been held to be necessary within a reasonable time after 
taking them. Here the notes were taken after the bankers had stopped, 
and they never resumed their payments. The defendant, therefore, can- 
not have been prejudiced by reason of the notes not having been pre- 
sented for payment. If an a^ion upon the notes had been brought 
against the bankers, or if the defendant had been an indorser, in either 
case it would have been necessary to aver and prove presentment for 
payment. But here the action is not brought upon the notes, nor is the 
defendant a party to them, and therefore he cannot insist on the want of 
presentment as a defence to this action. The distinction seems to be 



258 BOSS ON COMMEBOIAL LA'W. 

between persons merely passing bills or notes without being parties to 
them, and drawers and indorsers who are parties to them. In Warring- 
ton V. Furbor, 8 East, 242, the vendee of goods having accepted a bill 
of exchange for the price, and becoming bankrupt before the bill was 
due, it was held that a guarantee of the acceptance who paid the vendor 
the amount of the bill after the bankruptcy of the, vendee, might recover 
the money from the latter without proving that any presentment was 
made to the acceptor before such payment by the guarantee, and that 
upon the ground that the liability not being upon the bill itself, but upon 
the guaranty, a presentment to the bankrupt acceptor was unnecessary. 
That case is an authority to show that a person who is not a party to a 
bill cannot complain of laches or want of notice unless it has done him 
an actual prejudice; and Swinyard v. Bowes, 5 M. & S. 62, also shows 
that a person who is not a party to a bill cannot complain of laches in 
not giving him notice of dishonour by the acceptor, as he might do if he 
were a drawer or indorser; and Murray v. King, 5 B. & A. 165, is to 
r*!?fiQn ^^^ same effect. In Phillips v. Astling, 2 Taunt. 206, *the want 
L J of presentment was held to be a good defence to an action brought 
upon a guaranty given, for the price of goods to be paid for by a bill; 
but this was on the ground that the acceptor at the time when the bill 
became due was solvent. In Holbrow v. Wilkins, 1 B. & C. 10, the 
plaintiff sold goods for the , price of which the vendees accepted a bill, 
and the defendant guaranteed half the amount ; but before the bill was 
due the vendees became insolvent, of which the defendant was then in- 
formed, and also that the plaintiffs looked to him for the sum which he 
had guaranteed. The bill was - not . presented for payment, and in an 
action brought against the defendant as guarantee, it was held that the 
want of presentment was no defence to the action. That is an authority 
to show, that in an action against a guarantee not party to a bill or note, 
presentuiient for payment is unnecessary when the acceptor or maker is 
insolvent at the time the bill becomes due. i , 

These several authorities establish that tie want of presentment is no 
defence in this action, the defendant not being a party to the bill, and 
not being actually damnified by the neglect .to present. The defendant 
here merely passed the notes to the plaintiff in payment of a debt; he 
did not transfer them to the plaintiff as indorsee ; he may be' considered, 
therefore, in the light of a mere guarantee of the debt. As indorser, he 
would have been liable only according to the usage and custom of mer- 
chants, and in that case a neglect to present would be a bVrach of the 
obligation imposed by the law merchant on the party taking the bill, to 
do all that is necessary to obtain payment from the acceptor, and to give 
due notice to the drawer and indorsers. The Statute of 3 & 4 Anne,c. 
9, § 7, does not assist the defendant, since its terms do not apply to notes 
payable to bearer, but to bills of exchange only. It may be conceded 
that if the bankers had not stopped before the time when the notes ought 
in due course to have been presented, the holders would have been guilty 
of laches by not having presented them ; but here the bankers had stopped 
even at the very time when the notes were paid to the plaintiff. Such 
notes pass from hand to hand like cash, and it would be highly inconve- 



BILLS 01* EXOHANGi:. 259 

nient to require erery person taking them after the stoppage of a bank to 
send them from any *distance for presentment, when such pre- no'rn-i 
sentment has become, by the stoppage, useless and nugatory. L J 
Then as to the second point, there could be no legal obligation on the 
plaintiff to return the notes to the defendant, any further than as the 
retur'hing of them might operate as notice to the defendant that the 
makers had refused payment. It was the bounden duty of the defend- 
ant to take notice that the bankers had stopped payment ; for a person 
who passes bankers' notes to another must be considered impliedly to 
undertake at the time when he passes them, that the makers of the notes 
are then solvent and in condition to pay them ; and if they are not there 
is a breach of this implied guaranty. The fact of their insolvency must 
be taken to be a matter rather within the knowledge of the party passing 
the notes than of the person receiving them. Notice of non-payment to 
the drawer of a bill is required on the presumption that he has funds in 
the hands of the acceptor ; and notice to the indorser is required in order 
to enable him to take his remedy over against the drawer ; but here the 
defendant was neither drawer nor indorser of the notes. There is no 
ground for presuming that a mere passer of bankers' notes has any funds 
in the hands of the bankers ; nor has he, like the indorser of a bill or 
note, any remedy over against a third party on the instrument. It can- 
not reasonably be presumed, therefore, that the defendant could have 
derived benefit from having earlier notice of the dishonour of the notes. 
If he had in fact sustained any damage by reason of the want of notice, 
that fact should have been proved, as, for instance, if he had paid any 
money to the bankers after the stoppage, without setting off the sum due 
on the notes, and to that extent he would be entitled to be indemnified ; 
but here he has sustained no such damage. 

Oresstoell, contra. — By the Statute 3 & 4 Anne, c. 9, § 7, it is enacted, 
"That if any person doth accept any bill of exchange, for and in satis- 
faction of any former debt, the same shall be accounted a full and com- 
plete payment of such debt, if such person accepting any such bill for his 
debt doth not take his due course to obtain payment thereof by endea- 
vouring to get the same accepted and paid." ' Here there was a former 
*debt, the notes were taken for that debt, and the plaintiff, did rsqw-i-i 
not take his due course to obtain payment thereof. It is. clear, L -■ 
therefore, that unless bills of exchange stand upon a different footing 
from promissory notes, the debt for_which the notes in question w'ere 
given has been satisfied;- But since the Statute 3 ,& 4 Anne, c. 9, there 
is no distinction in this respect between a promissory note and a bill of 
exchange. In Bayley on Bills, p. 171, it' is laid down that the receipt 
of a bill or note implies an undertaking from the receiver to every party 
to the bill or note who would be entitled to bring an action on paying it, 
to present in proper time .the one, where necessary, for acceptance, and 
each for payment ; to allow no extra time for payment, and to give notice 
without delay to such person of a failure in the attempt to procure a pro- 
per acceptance or payment. This is the general rule, and there are 
many cases where it has been held that the insolvency of the drawer and 
acceptor of a bill of exchange does not dispense with the necessity of 



260 BOSS ON OOMMEBOIAL LAW. 

notice ; Kussell v. Langstaffe, Doug. 514 ; Howe v. Bowes, 16 East, 112, 
and 5 Taunt. 30; Eohde v. Proctor, 4 B. & 0. 517. In Esdaile v. 
Sowerby, 11 East, 114, the insolvency of the drawer and acceptor, and 
the knowledge of that insolvency by the defendant, was held not to dis- 
pense with the necessity of a demand of payment, and notice to the de- 
fendant of the dishonour of the bill ; and it was there said, that notice 
means something more than knowledge, because it was competent to the 
holder to give credit to the maker. From this it would seem that the 
holder of a bill or promissory note, by neglecting to present them, is con- 
sidered as giving a new credit to the acceptor or maker ; and this view 
of the subject is taken by Pratt, C. J., in the case of Moor v. Warren, 
Str. 415. There the defendant, at two o'clock in the afternoon, gave the 
plaintiff a banker's note, and he tendered it in payment the next morn- 
ing at nine ; the banker stopped a quarter of an hour before. In that 
case, Pratt, C. J., told the jury that the loss should fall on the defend- 
ant, there being no laches in the plaintiff, who had demanded the money 
as soon as was usual in the course of dealing, and that keeping the note 
till next morning could not be construed giving a new credit to the 
[-„_„, banker; and the jury found for the plaintiff; and in *Holme v. 
■- J Barry, Str. 415, the circumstances were the same ; and King, C. 
J., of the Common Pleas, gave a similar direction, and the jury found 
accordingly. But it follows from these cases, that if a new credit had 
been given, the loss would have fallen upon the holder of the instrument. 
In Cory v. Scott, 3 B. & A. 619, the rule is well laid down, that notice 
of dishonour must be given to all parties, who, upon paying the bill or 
note, would be entitled to a remedy over against some prior party ; and 
in Dennis v. Morrice, 3 Esp. 158, Lord Kenyon refused to receive evi- 
dence that no actual damage had been sustained from the neglect to give 
notice. Here the defendant, upon taking up the notes in question, would 
clearly have had a remedy over by action against Dobson and Co. If 
then the insolvency of the maker does not render notice of the dishonour 
unnecessary, and the defendant, according to the general rule, was enti- 
tled to notice, the only remaining question is, Whether it makes any 
difference that the notes were paid away by him after Dobson and Co. 
had stopped payment? There is no case precisely in point; but in prin- 
ciple there is no difference between this case and Beeching v. Gower, 
Holt, N. P. C. 313, where it appeared that a note of a country bank 
was given in payment while the bank coiitinued open, but before the 
time allowed by the law merchant for presentment had expired, the bank 
failed ; yet it was held that the holder was boupd to present the note for 
payment in due time, and by neglecting to do so made it his own. The 
cases of Warrington v. Eurbor, and Swinyard v. Bowes, are wholly inap- 
plicable. There the party, relying upon the want of notice, was uncon- 
nected with the instrument, and would not, by paying it, have acquired 
any remedy over against prior pa.rties. 

Batley, J. — I think that the defendant in this case is entitled to the 
judgment of the court. One short observation disposes of Warrington 
V. Furbor, and Swinyard v. Bowes, the authorities cited to show that it 
was not necessary in this case to prove presentment for payment. la 



BILLS OP EXCHANGE. 261 

those cases, the person insistiDg on the want of presentment was not a 
party to the bill ; but here the defendant was a party to the notes, for 
they were payable to the bearer on demand, and he was *the r;(.Q7qT 
holder of them, and when such notes are passed from hand to •- J 
band, the person taking them mast trace his right through the former 
holder. If the notes had been given to the plaintiff at the time when 
the corn was sold, he could have had no remedy upon them against the 
defendant. The plaintiff might have insisted upon payment in money. 
But if he consented to receive the notes as money, they would have been 
taken by him at his peril. If indeed he could show fraud or knowledge 
of the maker's insolvency in the payer, then it would be wholly imma- 
terial whether they were taken at the time of sale or afterwards. Here 
the notes were given to him in payment subsequently, and the question 
is. Whether they operate as a discharge of the debt due to the plaintiff 
in respect of the com ? 

The rule as to all negotiable instruments is, that if they are taken in 
payment of a pre-existing debt, they operate as a discharge of that debt, 
unless the party who holds the instrument does all that the law requires 
to be done in order to obtain payment of them. Then the question is, 
What it was the duty of the plaintiff to do in order to obtain payment 
of these notes ? They were intended for circulation. But I think that 
he was not bound immediately to circulate them, or to send them into 
the bank for payment ; but he was bound, within a reasonable time after 
he had received them, either to circulate them or to present them for 
payment. Now, here it is conceded, that if there had not been any 
insolvency of the bankers, the notes should have been circulated or present- 
ed for payment on the Monday. It is clear that the plaintiff on that 
day might have had knowledge that the bankers had stopped payment, 
and having that knowledge, if presentment was unnecessary, he had then 
another duty to perform. In consequence of the negotiable nature of 
the instruments, it became his duty to give notice to the party who paid 
him the notes, that the bankers had become insolvent, and that he the 
plaintiff would resort to the defendant for payment of the notes ; and it 
would then have been for the defendant to consider whether he could 
transfer the loss to any other person, for unless he had been guilty of 
negligence, he might perhaps have resorted to the person who paid him 
the notes. That party would, however, *be discharged if he 



received no notice of non-payment, or of the insolvency of the 



[*374] 



bankers till a week after he had paid them to the defendant. The neg- 
lect, therefore, on the part of the plaintiff to give to the defendant notice 
of the insolvency of the bankers, may have been prejudicial to the 
defendant. The law requires that the party on whom the loss is to be 
thrown should have notice of non-payment, in order to enable him to 
exercise his judgment whether he will take legal measures against other 
parties to the bill or note. Now here, if the notes had been returned on 
the Tuesday to the defendant, he might have taken steps against the 
bankers, and he had a right to exercise his judgment whether he would 
do so or not, although they had stopped ; or he might have had a remedy 
against the person who had paid him the notes. It may be hard in some 



262 ROSS ON COMMERCIAL LAW. 

cases that the entire loss should fall upon any one individual ; but it is 
a general rule applicable to negotiable instruments, and not to be relaxed 
in particular instances, that the holder of such an instrument is to 
present promptly, or to communicate without delay notice of non-pay- 
ment, or of the insolvency of the acceptor of a bill or the maker of a 
note, for a party is not only entitled to knowledge of insolvency, but to 
notice that in consequence of such insolvency he will be called upon to 
pay the amount of the bill or note. The case of Beeching v. Grower ia 
an answer to the whole of the argument for the plaintiff, founded upon 
the fact that the notes were paid away after the bank had stopped. For 
these reasons, I am of opinion that the plaintiff is not entitled to recover, 
and that a judgment of nonsuit ought to be entered. 

HoLKOYD, J. — I think that, under the circumstances of this case, the 
plaintiff is not entitled to recover. The notes were paid by the defendant 
and received by the plaintiff as money, and having been paid and received 
as money, and both parties being innocent, and the notes being what 
they imported to be, it seems to me that they must, according to the 
ease of Miller v. Race, operate as payment. But without deciding that 
the plaintiff was debarred in the first instance from electing to consider 
them either as negotiable instruments, or as money, I think they operated 
P^„-,, as payment, and that the plaintiff, *by not taking due steps to 
L J obtain payment, lost his right to return them to the party from 
whom he received them j for although bills and notes, delivered as satis- 
faction of a debt, do not in general operate as a satisfaction, unless they 
turn out to be valuable, yet the case is otherwise if due steps are not 
taken to obtain payment from the party who is in the first instance bound 
to pay them. The instruments in question are, in point of law, promis- 
sory .notes, and therefore due diligence ought to have been used to obtain 
payment, and if payment had been refused, notice ought to have been 
given of that refusal. Now, here the notes were not presented for pay- 
ment. It is true, that at the time when the plaintiff ought to have pre- 
sented them, for, payment, the. bankers had become insolvent ; but that 
being eo, the. plain tiff ought then, at all events,' to have given notice to 
theidefendant that the bankers had become insolvent; and that he, the 
plaintiff, therefore required him, the defendant, to pay them. Not hav- 
ing done so, I think the plaintiff is not entitled to recover. 

LiTTLEDALE, J. — I think the plaintiff is not entitled to recover. If 
the notes were , taken as negotiable instruments, then they were taken 
subject to a. condition that the holder would do all that was required to 
obtain payment in, that case; and they ought to have been presented for 
payment within a reasonable time, or at least notice of the insolvency of 
the bankers ought to have been given to the defendant. If they were 
taken as money, absolutely and without any condition, then the plaintiff 
took them for whatever they might be worth. It would be otherwise if 
they were forged, for then they would not be what they purported to be. 
But here they were what they purported to be. I think that there is 
no guarantee implied by law in the party passing a note payable on de- 
mand to bearer, that the maker of the note is solvent at the time when 
it is so passed. Judgment of nonsuit. . ; 



BILLS OP EXCHANGE. 263 



*THE DRAWEE OV A BILL, BY HIS ACCEPTANCE, IS HELD TO 

GDAEANTEE THE GENUINENESS OE THE DRAWEE'S SIGNATURE, ^ ■' 

AND CANNOT, ON THE GROUND OF ITS BEING A EOKGERY, RECOVER 
FROM THE PARTY TO WHOM HE HAS MADE PAYMENT J NEITHER CAN 
THE BANKER OF A SUPPOSED ACCEPTOR, WHO MAKES PAYMENT TO A 
BONA FIDE ONEROUS INDORSEE, RECOVER ON THE GROUND THAT THE 
ACCEPTANCE IS FORGED. 

I.— PKICE V. NEAL. 
Not. 16, 1762.— E. 3 Burr. 1334. 1 Bl. E. 390. 

This was a special , case reserved at the sittings at Guildhall, after 
Trinity Term, 1762, before Lord Mansfield. 

It was an action upon the case brought by Price against Neal, wherein 
Price declares that the defendant Edward Neal was indebted to him in 
£80, for money had and received to his the plaintiff's use ; and damages 
were laid to £100. , The general issue was pleaded, and issue joined 
thereon. 

It was proved at the trial, that a bill was drawn as follows : — " Leices- 
ter, 22d November, 1760. Sir, — Six weeks after date pay Mr. Kogers 
Buding, or order, forty pounds, value received from Mr. Thomas Plough- 
for, as advised by, Sir, your humble servant, Benjamin Sutton. To 
Mr. John Price, in Bush Lane, Cannon Street, London;" indorsed "B. 
Buding, Antony Topham, Hammond and Laroche. Beceived the con- 
tents, James Watson and Son ; witness, Edward Neal." 

That this bill was indorsed to the defendant for a valuable considera- 
tion, and notice of the bill left at the plaintiff's house on the day it be- 
came due. Whereupon the plaintiff sent his servant to call on the 
defendant, to pay him the said sum of £4lO, and take up the said bill ; 
which was , done accordingly. ■ i ',,■■•- 

That another ;bill was drawn as follows: — "Leicester, 1st February, 
1761. Sir, — Six weeks after date pay Mr. Bogers Buding, or order, 
forty pounds, value received for Mr. Thomas Ploughfor, as advised by, 
Sir, your humble servant, Benjamin Sutton. To Mr. John. Price, in 
Bush Lane, Cannon street, London." That this bill was indorsed "B. 
Buding, Thomas Watson and Son. Witness for Smith, Bight and Co." 
That the plaintiff accepted this bill, by, writing on it, "Accepted, John 
Price j" and that ' the , plaintiff wrote on the back of. it, "Messieurs 
Freame and Barclay, pray pay forty pounds for John Price.". 

*That this bill being, so accepted was' indorsed to the defend- r^oi^i,-! 
ant for a valuable consideration, and left at his bankers,' for pay- L J 
ment; and was paid, by order of the plaintiff, and. taken, up. y , 

Both these bills were forged by one Lee, who has been since hanged 
for forgery. ■ , . i . i ,■ 

The defendant Neal acted innocently and bona .fide, without the least 
privity or. suspicion of the said forgeries or of either of them, and paid 
the whole value of those ibills. , , , ,, ,..-.... 



264 EOSS ON COMMERCIAL LAW. 

The jury found a verdict for the plaintiflF, and assessed damages £80, 
and costs 40s., subject to the opinion of the Court upon this question : — 
" Whether the plaintiflF, under the circumstances of this case, can recover 
back from the defendant the money he paid on the said bills or either of 
them?" 

Mr. Stowe, for the Plaintiff, argued that he ought to recover back the 
money in this action, as it was paid by him by mistake only, on supposi- 
tion " That these were true genuine bills ;" and as he could never recover 
it against the drawer, because in fact no drawer exists; nor against the 
forger, because he is hanged. 

He owned that in a case at Guildhall, of Jenys v. Fawler, et al., (an 
action by an indorsee of a bill of exchange brought against the acceptor,) 
Lord Kaymond would not admit the defendants to prove it a forged bill, ' 
by calling persons acquainted with the hand of the drawer to swear that 
they believed it not to be so; and he even strongly inclined, that actual 
proof of forgery would not excuse the defendants against their own ac- 
ceptance, which bad given the bill a credit to the indorsee. 

But he urged, that in the case now before the Court, the forgery of 
the bill does not rest in belief and opinion only, but has been actually 
proved, and the forger executed for it. 

Thus it stands even upon the accepted bill. But the plaintiff's case 
is mudi stronger upon the other bill which was not accepted. It is not 
stated, " That that bill was accepted before it was negotiated ;" on the 
contrary, the consideration for it was paid by the defendant, before the 
plaintiff had seen it. So that the defendant took it upon the credit of 
the indorserS) not upon the credit of the plaintiff; and therefore the 
r#R78T *'®^s°'i upon which *Lord Eaymond grounds his inclination to 
L -I be of opinion "That actual proof of forgery would be no ex- 
cuse," will not hold here. 

Mr. Tates, for the Defendant, aTgued that the plaintiff was not entitled 
to recover back this money from the defendant. 

He denied it to be a payment by mistake ; and insisted that it was 
rather owing to the negligence of the plaintiff, who shonld have inquired 
and satisfied himself "Whether the bill was really drawn upon him by 
Sutton or not." Here is no fraud in the defendant, who is stated " to 
have acted innocently and bona fide, without the least privity or suspt' 
cion of the forgery, and to have paid the whole Value for the bills." 

Lord Mansfield stopped him from going on. Saying, that this was 
one of those cases that could never be made plainer by argument. 

It is an action upon the case for money had and received to the plain- 
tiff's use ; in which action the plaintiff cannot recover the money, unless 
it be against conscience in the defendant to retain it, and great liberality 
is always allowed in this sort of aotioti. 

But it can never be thought unconscientious in the defendant to 
retain this money when he has once received it upon a bill of exchange 
indorsed to him for a fair and valuable consideration, which he had bona 
fide paid, without the least privity or suspicion of any forgery. 

Here was no fraud, no wrong. It was incumbent upon the plaintiff 
to be satisfied "That the bill drawn upon him was the drawer's hand," 



BILIiB OF EXOHAiraE. 265 

before he accepted or paid it, but it waa not incumbent upon the defend- 
ant to inquire into it. Here was notice given by the defendant to the 
plaintiff of a bill drawn upon him, and he sends his servant to pay it 
and take it up. The other bill he actually accepts; after which accept- 
ance the defendant innocently and bona fide discounts it. The plaintiff 
lies by for a considerable time after he has paid these bills, and then 
found out " That they were forged," and the forger comes to be hanged. 
He made no objection to them at the time of paying them. Whatever 
neglect there was, was on his side. The defendant had actual encourage- 
ment from the plaintiff *himself for negotiating the second bill, r«Q7q-i 
from the plaintiff's having, without any scruple or hesitation, I- J 
paid the first; and he paid the whole value, bona fide. It is a misfor- 
tune which has happened without the defendant's fault or neglect. If 
there was no neglect in the plaintiff, yet there is no reason to throw off 
the loss from one innocent man upon another innocent man; but in this 
case, if there was any fault or negligence in any one, it certainly was in 
the plaintiff, and not in the defendant. 

Fes Cur. Rule — That the postea be delivered to the defendant. 



II. — SMITH v. MERCER. 
Feb. 13, 1815.— E. 6 Taunt. E. 76. Bng. Com. Law Reps. vol. 1. 

Assumpsit for money had and received, and on the other money 
counts. At the sittings in London after Michaelmas Term, 1814, before 
6iBBS, C. J., a verdict was found for the plaintiffs for jS120, subject to 
a case. 

The plaintiffs were bankers in London, with whom Maurice Evans 
kept cash; the defendants were bankers at Tunbridge, and were bona 
fide holders, for a valuable consideration, paid by them to Peter Le 
Souef, of a bill of exchange, drawn on 15th Feb. 1811, by Tho. Temple, at 
sixty-five days' date, on Maurice Evans for £120, payable to the drawer's 
order, and 'indorsed by Temple and P. Le Souef. The bill, when it 
came to the defendant's hands, appeared to be thus accepted — "Smith, 
Payne, and Smiths, Maurice Evans." This acceptance was forged. 
Before the bill was due, the defendants indorsed the same, and sent it 
with their' indorsement thereon to their corresponding bankers and 
agents in London, Spooner and Co., to be received for them at maturity. 
Upon the bill being presented by Spooner and Co., to the plaintiffs for 
payment on the 23d of April, when it became due, they immediately 
paid the amount to Spooner and Co., who paid the amount in account to 
the defendants, all the parties being at the time equally ignorant r^t-gon-i 
of the forgery. The plaintiffs sent the bill to "Evans at the L -I 
usual time,' with the other vouchers of payments made for him, and 
Evans immediately returned the same to them as forged, and refused to 
allow the payment thereof as a payment made on his account. The 
plaintiffs, upon discovering the forgery, on the 30th of April, 1814, gave 



266 ROSS ON OOMMEBOIAL LAW. 

notice to the defendants that the acceptance was forged, and required the 
defendants to repay the money, which they refused to do. 

Lens, Serjt., for the Plaintiffs. — ^No circumstances of this case take it 
out of the general rule, that the plaintiffs have paid to the defendants a 
sum of money upon a consideration which has failed, and are therefore 
entitled to recover it back. The plaintiffs have done no act tending to 
give authenticity to this forged instrument, they have merely paid it 
when it was presented. This case is governed by those wherein the 
question was fully considered, of Jones v. Ryde, 5 Taunt. 489, and 
Bruce v. Bruce, 5 Taunt. 495, particularly by the last of them. [Gibbs, 
C. J., observed that the latter case could not be used as an authority in 
this, to the extent intended. It was there held, that since the Victual- 
ling Office had received the money back from the Bank of England, and 
the Bank of England had received it back from the plaintiffs, the plain- 
tiffs might recover from the defendants. The defendants' argument there 
was, that the plaintiff, who had improvidently submitted to a demand 
which could not have been enforced against him, did not thereby acquire 
a right to sue the defendant. The answer given was. That the bill was 
still to be considered in the light of an unpaid bill, which the defendant 
had put off on the plaintiff as a good bill, but which proved to be forged. 
There were also some circumstances which made the Court doubt whether 
that case fell within the general law, and which made it distinguishable 
from Price v. Neal.] This case also is distinguishable from Price v. Neal,- 
in which the judgment proceeded on the ground that the plaintiff had, by 
his own act in paying the first bill, positively encouraged the defendant 
to take the second as genuine, and therefore liad precluded himself from, 
recovering back the money. But in this case the plaintiffs are not 
drawees, nor do they accept the bill, or add any credit to it, for it is not 
P^qn^-. negotiated beyond them; they *merely pay it when presented, 
L J which is far short of saying that it was the acceptance of Evans; 
and their act in paying it, being long subsequent to the defendants' 
taking the bill, could have no influence on their minds. 

■ Best, Serjt., for the Defendants. — The case of Jones v. Ryde, and 
Bruce v. Bruce, do not conflict with Price v. Neal. And this case 
ranges itself with the latter. It was the peculiar duty of the plaintiffs, 
as the bankers of Evans, to be conversant with his signature. The de- 
fendants had no means of becoming acquainted with, his handwriting. 
In Price v. Neal, the judgment of the Court did not turn upon the en- 
couragement given by the plaintiff to the circulation of the bill, but: on 
the mere fact of his paying it, for the plaintiff never, aoceptpd,. the, first 
bill, but merely sent his servant, upon notice of.the bill bqing due, to 
take it up and pay it, which could not operate as an encouragement to 
the holder's prior act of taking the ])ill.. The case on the second bill, 
which the plaintiff actually accepted, was abandoned, by the plaintiff's- 
counsel; and Lord ..Mansfield's observation, that i the. plaintiff;had en- 
couraged the defendant to take it, applies to the, second bill, only, which 
is .wholly dissimilar to this case. In the reportin Blaokstone, the Court 
lays stress on the ciroumstancp, most appropriate tO; the present case, 
that the plaintiff is the only person who knows the drawer's handwriting. 



BILLS 01' EXOHANaE. 267 

There is equal hardship on the plaintiffs and on the defendants, hut the 
negligence is in the plaintiffs, not in the defendants, and where the negli- 
gence is, whether more or less in degree, there the loss ought to fall. 
The Court will not measare degrees of negligence; if there be any negli- 
gence in the plaintiffs, they are precluded from recovering; but it is not 
only some, but an extreme degree of negligence in a banker, not to know 
the handwriting of his customers. Here then, as in Price v. Neal, is an 
admission of the genuineness of the bill by a person competent and re- 
quired to know the handwriting, and the cases only differ in the imma- 
terial circumstance, that in the one the drawer's, and in the other the 
acceptor's hand is forged. The person who takes a bill before it is 
mature, does not, by taking it, recognise it as a genuine bill, nor rmoooT 
is it incumbent on him *before its maturity to inquire of the •- J 
payee as to its authenticity; but the person who delivers it over to him 
does represent and warrant it to be a genuine bill. 

Lens, in reply. — In Price v. Neal, the plaintiff's counsel argued for 
his right to recover on both the bills. It cannot be deemed extreme 
negligence that every banker's clerk does not know how to discover all 
forgeries, many of which are not without great nicety and difficulty dis- 
cerned. In Jones v. Hyde the forgery was easy to be discovered, for 
the words "eight hundred," in letters, were left unaltered. There was 
no mode of discovering this till the vouchers were returned to Evans by 
the plaintiffs. But neither ■ has there been any negligence here, nor 
have the defendants lost anything by the delay; for if this forgery had 
been sooner discovered, the defendants would have had no civil remedy 
against the author of it, for the debt would be merged in the felony. 
Nothing which the plaintiffs have done has deteriorated the condition of 
the defendants, wherein is a strong distinction between this case and 
Price V. Neal. Here is only the bare, act of paying the bill, which is 
very far short of accepting it, or of representing for the guidance of an- 
other that it is genuine. It will not therefore militate with the case of 
Price v. Neal, to decide this in favour of the plaintiffs. 

Cur. adv. vuU. 

On this day the Court delivered their opinions seriatim. 

Dallas, J., recapitulated the facts of the case, after which he thus 
proceeded : — It is stated in the case that all the parties at the time of 
payment of the bill were equally ignorant of the forgery; and the ques- 
tion is, On whom the loss ought to fall ? And though the' facts are not 
precisely th% same, I think the case of Price v. Neal furnishes a rule 
which ought to govern the present. The case of Price v. Neal was in 
substance this: — Two bills had been drawn, the first was only presented , 
when due; the second, drawn some time after the first, was accepted, and 
paid when due. Both proved to be forgeries as to ' the handwriting of 
the drawer; and the plaintiff who had paid them contended, that having 
paid by mistake, he was entitled *to. recover back the money r:|tqoQn 
from the indorsee, who was an innocent and boni, fide holder. <■ -I 
As to the facts of this case, it may be necessary to distinguish', before 
adverting to the judgment of the Court. The first bill had not derived 
additional credit from the acceptance, for it had not been accepted; but 



268 ROSS ON COMMERCIAL LAW. 

the second bill had been accepted, and was therefore different in this 
respect. The action was brought to recover back the amount of both 
bills. For the plaintiff, the argument at the bar proceeded on the ground 
of payment by mistake; but the first bill was said to stand upon ground 
even stronger than the second, inasmuch as when negotiated it had not 
been accepted, and therefore was not taken upon the credit of the ac- 
ceptor. In the judgment of the Court the two bills are also distinguished, 
but the distinction does not lead to any difference of conclusion; for the 
defendant was adjudged to retain as to both, and, as it seems, partly on 
two grounds : 1st, Of neglect in the plaintiff; 2dly, That supposing no 
neglect, the loss ought not to be shifted from one innocent man upon 
another. With the latter ground I shall not interfere upon the present 
occasion, for the former goes the whole length of reaching this case. 
And to see that it does, it is only necessary to ask what was the neglect?' 
The answer must be, the having paid when due caution would have pre- 
vented such payment. If an acceptor is then bound to know the 
drawer's handwriting, is it less the duty of a banker to know the hand- 
writing of his customer? In degree^ it is more so; for he sees it, proba- 
bly, every day. I consider, therefore, the payment of this bill as a want 
of due caution on the part of the plaintiffs. But to distinguish it from 
Price V. Neal, it is said, payment by the bankers, after it became due, 
did not add to its credit or negotiability; so it was with the first bill in 
the case of Price v. Neal, yet this made no difference. Is it, however, 
productive of no injury to any of the parties on the bill? Suppose Smith' 
and Co. had not paid it, it would have been immediately returned to 
Spooner, and by him to Le Souef the indorser, and it might have been 
recovered or put in suit. But the effect of the delay has been to give 
him an extended credit; and how am I able to say that his situation in' 
ntf'?84.l ^^^ intermediate time may not have undergone such a change as 
L -I to render him incapable *of paying what he could have paid upon' 
proper notice and demand? Nor do I think it will be an answer to ob- 
serve that nothing of this sort is stated in the case; for the plaintiffs had 
no right to cast upon the defendants the burthen of such proof, which, 
in point of law, if the fact had existed, and could have made any differ- 
ence, it was for themselves to produce. The ground^ therefore, on which 
I rest my opinion, and to which I wish to confine it, is the want of due 
caution in having paid the bill, the effect of which has been to give time 
to different parties, which the plaintiffs were not authorized to do. 

Chambrb, J. — I think the plaintiffs are in this case entitled to re- 
cover. The bill appears drawn in the name of Thomas Temple, payable 
to himself or order, directed to Maurice Evans, and indorsed by Temple. 
The next indorser is Peter Le Souef, and it appears that the bill had the 
forged acceptance on it when it was in his hands, and in that state he 
indorsed it, and the defendants received it from him for a valuable con- 
sideration, bona fide paid to him by the defendants. The forged accept- 
ance purported to make the bill payable at the plaintiffs', who were the 
bankers of the supposed acceptor in London. The defendants, in order 
to receive the money for which the bill was given, indorsed it, and sent 
it to their bankers in town, who sent it to the plaintiffs, and they imme- 



BILLS OF EXCHANOE. 269 

diately paid it, under the supposition that they were directed so to do by 
Evans. At what particular period the forgery was committed, and who 
was then the holder of the bill, is not stated ; but it is stated that the 
parties at the time, meaning, I suppose, the plaintiffs, the defendants, 
and their bankers, were equally ignorant of the forgery. About a week 
afterwards, the plaintiffs sent the bill as a voucher to Evans, and he, 
finding out the forgery, refused to allow the payment, and sent back the 
bill to the plaintiffs. The plaintiffs then gave the defendants notice that 
the acceptance was forged, and required the money to be repaid. Upon 
these facts the present action is brought, and it is brought on the gene- 
ral principle that when money not really due is paid by mistake, it is 
recoverable in this form of action. In this case the money has been "paid 
without any consideration, and under a mistake ; *and not only r»oQc-i 
under a mistake, but under a representation made to the plain- L J 
tiffs by the defendants, who indorsed the bill with that forged acceptance 
on it, that the plaintiffs were required and directed so to pay it by the 
person whose agents they were in money transactions. Cases undoubt- 
edly may exist that form exceptions to the general rule. Such are cases 
respecting bills of exchange, under circumstances wherein the doctrine 
might produce injurious consequences in that species of negotiation, and 
particularly where the party claiming restitution has himself, though in- 
nocently, given credit to the instrument by his own previous acceptance 
or indorsement. There the party who wants to recover back his money, 
has himself given a kind of warranty to subsequent takers, and^ill not 
be permitted to recover against those who have innocently received the 
money claimed to be due on such bills. The case of Jenys v. Fowler, 2 
Str. 946, is alluded to both in Blackstone's and Burrow's reports of 
Price V. Neal. That was a case where the acceptor was not permitted to 
prove the forgery of the bill he had accepted, for the reason given by 
Lord Kaymond, C. J., that it would be dangerous to negotiable notes. 
Blackstone says, the demand on the accepted bill in Price v. Neal, was, 
on the authority of that case, given up by the plaintiff's counsel, and I 
cannot well understand why the reasons which relate thereto are introduced 
into the consideration of the court on the other bill in Price v. Neal j 
but the other part of that case, which relates to the bill not accepted, 
was there the subject of the decision of the court, and is relied on in the 
present case as an authority for the defendants. Blackstone, J., has in 
his report rather jumbled together the observations applicable to the 
case on one of the bills 'With those applicable only to the other. Among 
other things, the acceptance is relied on as applicable to both. All that 
he makes the Court say respecting the unaccepted bill, is, "The negli- 
gence in the plaintiff Twho had taken up the forged bill) is greater than 
can possibly be imputed to the defendant." That is a singular subject 
of calculation. He says, "Where the loss has fallen, there it must lie; 
one innocent man must not relieve himself by throwing it on another." 
So I should say here. The defendants have paid their money for that 
which is *of no value; they have thereby sustained a loss, and r*qoo-i 
they ought not to be permitted to throw that loss upon another L -I 
innocent man, who has done no act to mislead them ; and still less ought 
May, 1854.— 18 



270 ROSS ON OOMMEKOIAL LAW. 

they to be so permitted, where, instead of being misled by any act of 
the plaintiffs, they themselves have given the appearance of authenticity 
to the instrument by their own indorsement, which was a sort of warranty 
of its genuineness at a time when the forged acceptance made a part of 
the instrument. The report of the case in Burr, is fuller. It speaks 
of the liberality of the action for money had and received, and puts the 
case upon the ground that the defendant might conscientiously retain the 
money, not because it was his, but because he has hold of it without 
any fraudulent intent. How he can satisfy his conscience by keeping 
that which is not his, I cannot tell, biit it is better not to encourage too 
far this latitude of conscience. The matter, however, has been lately 
discussed and decided in this Oourt in the two cases of Jones v, Kyde 
and Bruce v. Bruce. (Here the learned Judge stated the case of Jones 
V. Ryde.) A great part of the doctrine of Price v. Neal seems in that 
case to be wholly repudiated by the Court. Fenn v. Harrison, 3 T. R. 
757, was there cited j and my Lord Chief Justice says, "It is true, that 
jf he who negotiates a bill does not indorse it, he does not subject him- 
gelf to that responsibility which the indorsement would bring on him, 
viz., to an action to be brought against him as indorser, but he does not 
get rid of that responsibility which arises from his passing off an instru- 
ment of no value, and receiving value for it ;" and he compared it to the 
case of paying away forged bank-nptes. My brother Heath there ad- 
verts to what is said by Lord Kenyon^ that the person paying under such 
circumstances is entitled to recover back the money, and he refers to 
Cripps V. Eeade, 6 T. E. 606 j and my brother Dallas refers to the 
same case, and concurs with the rest of the Court. Bruce v. Bruce is 
a still stronger case. There the bill was actually paid, but the Court 
said they could not distinguish it from the case before decided. It is 
said in this case the negligence varies it; what was the negligence? 
How perfect the forgery was, we do not know. Some forgeries will de- 
ceive the party whose name is forged. Did the plaintiffs omit any 
r*S871 *'^^S'^^^ "^ reasonable diligence which lay within their power ? 
L J Evans, when the bill was sent to him, could not be deceived ; he 
must know; he detected the forgery, and gave immediate notice; where 
then is the negligence ? The bill had done its office, had ceased to be 
negotiated. It is not like bills which have to go further in circulation. 
I cannot therefore think this was a case of gross negligence in the plain- 
tiffs. The situation of the plaintiffs is extremely mateariaL They are 
no parties to this bill, neither drawers, acceptors, nor payfees. They are 
not purchasers of the bill ; they never had any property in it ; they are 
mere servants and agents of the payees ; it is, as to them, a payment 
under a supposed authority, which does not exist. It falls within the 
general principle. My opinion, therefore, is, that the plaintiffs are enti- 
tled to recover. 

Heath, J. — I am of opinion that a nonsuit ought to be entered. I 
agree th&t this is a case of money paid without consideration, and I agree 
in the general principle, that money paid without consideration upon an 
instrument which proves to be of no value, may be recovered back; but 
there are particular circumstances in this case which materially alter, 



BILLS 07 EXOHANOZ. 271 

and take this case out of the general principle. If Evans had paid the 
bill, it is clear he would have been bound. Can an agent be in a better 
situation than his principal ? As between Evans and the agent, it may 
be a question whether the latter kept within the scope of his authority; 
but as to the rest of the world, it is the same thing whether it be the act 
of Evans or of his agent. It would be strange, if in an action by Evans 
himself he ought to be nonsuited; and that if the action be by the agent, 
he should recover. The situation of bankers is most peculiar; they are 
bound to know the hand-writing of their customers. If the law were 
otherwise, merchants making their bills payable at their bankers would 
have this extraordinary advantage, that if a forgery be imposed on their 
bankers, the principal would not be the sufferer by it; whereas, if it were 
imposed on themselves, they must bear the loss, and so would exempt 
themselves from that liability which would rest on them if they them- 
selves transacted their own business. 

*GiBBS, C. J — I concur in opinion with my brothers Heath f*QQo-i 
and Dallas. A narrow and particular ground is with me con- L J 
elusive on this case. If the acceptance had been genuine, and the plain- 
tiffs had refused payment, the defendants had their remedy against the 
supposed acceptor ; or if they failed to obtain the amount from him, 
they had their remedy against the prior parties on the bill. The accept- 
ance carried with it an order on the bankers of the supposed acceptor to 
pay the money; it purported to bo an order of Evans, whose bankers the 
plaintiffs were. It was incumbent on them to see to the reality of that 
order before ihey obeyed it ; and if, by obeying it, they are sufferers, 
they ought not to throw on another a loss accruing without fault of his. 
See the circumstances ! The defendants present the bill for payment, 
and it is paid to them. The money remained in their hands without 
demand made on them for it, from the 23d of April to the 30th of April; 
the forgery being then discovered, the plaintiffs demand it back from the 
defendants. If the plaintiffs had originally refused to pay this money, 
the holder would immediately have given notice to the drawer and to the 
immediate indorser, which would have been transmitted to the first in- 
dorser and drawer. In consequence of the bill being paid, the defend- 
ants continued to have the money in their hands till the 30th of April. 
I think it was then too late for the defendants to give notice to the prior 
parties; and by not having given such notice, they lost their remedy 
against those parties. If a person liable on a bill does not receive notice 
within a reasonable time, he is discharged for want of such notice. Here 
Temple was discharged ; by whose default ? By the plaintiffs' ! The 
defendants, while the bill continued paid, could not have given notice to 
him, for the bill was not then dishonoured ; and as the defendants have 
lost that opportunity by the negligence of the plainrtiffs, the latter can- 
not recover back the money from the former. I have put the ease on 
the express point that by the acts of the plaintiffs the defendants are put 
in a worse situation ; but I do not mean thereby to express my dissent 
from the larger ground on which the case has been put by my brothers 
Heath and Dallas y but I think the ground on which I have put it is 



272 EOSS ON COMMEEOIAX LAW. 

r*^8(>l ''^°°® * sufficient answer to all the arguments *that have been 
L J used, and is sufficient to warrant us in giving 

Judgment of nonsuit. 



THE HOLDER OP A BILL WHO TRANSFERS IT FOR VALUE, EITHER BT IN- 
DORSEMENT OR BY DELIVERY, IS HELD TO GUARANTEE THE GENUINE- 
NESS OP THE BIIL. 

JONES V. RYDE. 

May 4, 1814.— B. 5 Taunt. 488. Eng. Com. Law Eeps. vol. 1. 

This was an action of assumpsit for money had and received, which 
was tried at the sittings in London, after Michaelmas Term, 1813, before 
Mansfield, C. J., when a verdict was found for the plaintiffs, damages 
£1000, subject to a case, which in substance was, that the defendants, 
who were bill-brokers, were possessed of a navy-bill which purported to 
have been issued by the Transport Board, and to bear date, and have 
been registered on the 17th of July, 1813, and to be payable on the 
15th of October, 1813, and to be drawn on the treasurer of the navy in 
pursuance of a charter-party of 25th June, 1808, made with Messrs. 
Bell and Hobbs on behalf of the owners of the Wolga, Ward master, 
hired to serve His Majesty as a transport, for payment, ninety days after 
date, to Bell and Hobbs, or their order, of £1875, and more to them, 
for interest thereon, from 7th July to 5th October following, when that 
bill would become due, being ninety days, at 3d. per cent, per diem, 
£19, 16«. 10c?., together, ^61884, 16s. lOd. 

£1884 16 10 
Deduct property-tax, 1 19 9 



£1883 16 3 



In both, the sum of eight hundred and eighty-four pounds sixteen shil- 
lings and tenpence. On the 23d of August, the defendabts discounted 
P,„q^-I this bill with the plaintiffs, who were *stock and bill brokers; 
L -I they, calculating the interest upon £1883, 16«. Sd., the apparent 
amount of the bill, for fifty-three days, from 23d August to 15th Octo- 
ber inclusive, to be £13, 13«. Gd., then paid the defendants £1870, 2s. 
9^. as the difference, and received from them the bill. On 27th August, 
the plaintiffs discounted the same bill with Williams, who, calculating 
the interest upon the same apparent amount for forty-nine days, from 
that day to the 15th of October, to be £12, 12s. lOd., paid them £1871, 
Ss. 5d. as the difference, and received from them the bill. The bill 
issued from the Transport Office for £884, 16s. lOd. only, but before 
the 23d of August some person had altered it by prefixing the figure 1 
to the figures £884, 16s. 10c?., and £883, 16s. 3c?., in the several places 
where those sums occurred, and by prefixing the same figure 1 to each 
of the dates 7th July and 5th October, so that before, and when it was 



BILLS or EXCHANGE. 273 

discounted by the several above-mentioned parties, who were all uncon- 
scious of the alteration, it had thereby acquired, in the particulars 
altered, the appearance of a bill for the net sum of £1883, 16«. 3d., 
dated 17th July, and payable 15th October. On 5th October, Williams 
presented it at the Navy Pay Office for payment, which was refused on 
account of the alterations. Upon the requisition of the Commissioners, 
Williams deposited with them, without the knowledge of the defendants, 
the altered bill ; and in lieu of it accepted from them a new bill for the 
original amount, and received in discharge thereof, £883, 16«. 3d., after 
allowing £1, 0«. Id. for the property-tax charged on the interest. Wil- 
liams thereupon demanded of the plaintiffs repayment of £1000, the 
difference between the sum he had received from the Navy Pay Office 
and the sum he had paid for the bill to the plaintiffs, which they repaid 
him, and brought the present action to recover from the defendants the 
like difference of £1000. 

Lens, Serjt., contended that the plaintiffs were entitled to recover, 
because to the extent of £1000, the consideration upon which they had 
paid the money, had, without fraud or blame attaching on either side, 
failed. The plaintiffs did not intend to speculate on the value of the bill, 
both parties assumed the *value as a known quantity, subject to r^qni-i 
no hazard except the insolvency of the parties. Price v. Neal, L J 
3 Burr. 1354, was very distinguishable, for there the acceptor, who of 
all persons in the world ought to be most conversant with his own 
handwriting, acknowledged the forged acceptance to be his and paid it. 
[GriBBS, C. J., ace] The plaintiffs had not in this case the same facility 
of knowing whether the material parts of this bill were genuine. 

Vaughan, Serjt., contra This money having been paid in mutual 

ignorance of the facts, and without fraud on either side, there being 
equal equity, and equal diligence on both sides, potior est conditio pos- 
sidentis, and he may retain. This instrument passes without indorse- 
ment, by delivery only ; the transaction was a mere sale of the bill for 
£1870 2s. 9d., the plaintiff not requiring, and the defendant not giving 
any indorsement, warranty, or other security ; the vendee passes it into 
the hands of Williams, who, on discovering the defect, adopted and made 
the bill his own, for he did not give any information to, or make any 
demand on the plaintiffs or the defendant, but at his own peril compro- 
mised with government, and voluntarily gave up the bill, without trying 
to enforce it, and therefore could not compel any repayment from the 
plaintiffs ; Williams ought to have retained the instrument, and endea- 
voured to recover the whole apparent contents against government j if 
he had failed therein, there might be some pretence for his and the 
plaintiffi' attempts to recover from those from whom they had taken it, 
but as he voluntarily gave up the security, he was not entitled to recover 
from the plaintiffs ; and if they, the plaintiffs, have refunded any money 
to Williams, they have paid it in their own wrong, and cannot recover 
it from the defendants, who came to the bi,ll by the delivery of a person 
since executed for the forgery, and against whom they can never recover 
over; Bree v. Holbech, Doug. 655. Upon sale of a forged mortgage 
by an administrator with the will annexed, the consideration failed ; yet 



274 BOSS ON COMMERCIAL LAW. 

it was held that the purchaser could not recover back his money, having 
found it among his testator's papers, and parted with it without fraud. 
r*3921 ^^** "^^^ ^*® ""' distinguishable from the *present. The same 
L -I argument which prevailed in Price v. Neal may be pressed here. 
" It can never be thought unconscientious in the defendant to retain this 
money, when he has once received it upon a bill of exchange indorsed to 
him for a fair and valuable consideration, which he had bona fide paid, 
without the least privity or suspicion of forgery." The circumstance 
that the defendants took this bill in their capacity of bill-brokers, shows 
that they did not intend to make themselves personally liable. . The bill 
has turned out to be of the value of £883 16s. 3c?., and therefore the 
consideration has not failed, though the value .of the bill has proved to 
be less than the plaintiffs had in their speculation estimated. 

Lens, in reply It is argued by the defendants, that the payment 

made by Government to Williams was merely gratuitous. The effect of 
the argument, if correct, is, that the plaintiffs are entitled to recover 
from the defendants the whole £1883 16«. ScZ., without giving them 
credit for the sum received from Grovernment. This is not a compromise 
made with Grovernment at the risk of the plaintiffs or of Williams. The 
plaintiffs could not have resisted the claim of the latter. Bree v. Hol- 
bech turned on the nature of the usual covenants for title. An adminis' 
trator assigning a mortgage covenants only, that he has not encumberld, 
which precludes his further liability. The defendant has suffered no in- 
convenience by not having been earlier consulted respecting the bill, for 
neither any diligence of his, nor his possession of t4ie bill, could have 
bettered his situation. The defendant himself, in discounting this bill, 
treats it as a genuine instrument for the whole amount, and calculates 
interest accordingly. Both parties alike have dealt with the bill on that 
hypothesis, and both have been alike mistaken ; where the delusion be- 
gins, there the right to retain the money ends. 

GiBBS, C. J.— This is very distinguishable from the case of Price v. 
Neal, because there the bill was paid by the person who of all others 
was the best judge whether the acceptance was in his hand- writing or 
not, and he says, on looking at it, This is my hand-writing, and I pay it. 
pj,„qn-| The case of Barber v. *Gingell, 3 Esp. 60, is a much stronger 
L -I case even than that. It was an action on an acceptance written 
in the name of Gingell ; the defendant had not accepted, nor ever ac- 
knowledged that he had accepted that bill j but it was proved that he 
had paid bills with similar acceptances, which in fact were forgeries of 
his son ; and Lord Kenyon, C. J., held that the defendant, having given 
credit to similar acceptances in the like course of dealing, was bound to 
pay the bill in question. The Court are of opinion that the plaintiff is 
entitled to recover the sum he seeks to recover by this action ; and we 
think so on the ground on which it is put by my brother Lens, that this 
transaction is in the nature of an exchange between the two parties, made 
by the defendant upon the one hand, of a navy bill, professing to be a 
navy bill for £1884 16s. lOcZ., and the defendant representing it to be a 
genuine navy bill of that amount; and by the plaintiff, on the other 
hand, of a sum of money equivalent to the sum which would be paid 



BILLS or EXCHANGE. 275 

upon that bill when it should become due, supposing that it were a 
genuine navy bill, minus the interest for the time which it yet had to 
run. Both parties were mistaken in the view they had of this navy bill ; 
the one in representing it to be a navy bill of this description ; the othej 
in taking it to be such. Upon its afterwards turning out that this bill 
was to a certain extent a forgery, we think he who took the money ought 
"to refund it to the extent to which the bill is invalid. The ground of 
the defendant's resistance is, that the bill is not indorsed ; and that 
whensoever instruments are transferred without indorsement, the nego- 
tiator professes not to be answerable for their validity. This question 
was much mooted in Fenn v. Harrison, 3 T. R, 757, and it is true to a 
certain extent, viz., that in the case of a bill, note, or other instrument 
of the like nature, which passes by indorsement, if he who negotiates it 
does not indorse it, he does not subject himself to that responsibility 
which the indorsement would bring on him, viz., to an action to be 
brought against him as indorser ; but his declining to indorse the bill 
does not rid him of that responsibility which attaches on him for putting 
off an instrument as of a certain description, which turns out not to be 
such as he represents it. The defendant has in the present case put off 
this instrument as a *navy bill of a certain description ; it turns r.qQ^-i 
out not to be a navy bill of that amount, and therefore the money >- -• 
must be recovered back. Bree v. Holbech is very distinguishable. 
Common prudence required an administrator not to take on him more 
responsibility than his situation obliged him to incur, viz., to covenant 
that he had a good title notwithstanding any act done by himself; the 
covenant of an administrator ordinarily goes no further; and when an 
action is brought against him for money had and received, he says, 
You have all the security against me which a person in my situation 
ever gives, and that does not in the present case make me responsible. 
Compare this with the case of Cripps v. Keade, 6 T. R. 606, cited by 
my brother Heath. There was no deed; the whole rested in parol, 
and the whole was founded on the presumption that the title was such 
as it purported to be : it was not such as it purported to be, and there- 
fore the purchase-money could not be retained. In the present case, 
the navy bill is not such as it purported to be, and therefore the plain- 
tiff is entitled to recover. A case somewhat similar very frequently 
occurs in practice, on which I should not rely as governing the law, but 
that it is said by my brother Lens to be sanctioned on the authority of 
a case so decided at Nisi Prius, by Mansfield, C. J., namely, where 
forged bank-notes are taken. The party negotiating them is not, and 
does not profess to be, answerable that the Bank of England shall pay 
the notes ; but he is answerable for the bills being such as they purport 
to be. Therefore the plaintiff must recover the difference. 

Heath, J. — I am of the same opinion. If a person gives a forged 
bank-note, there is nothing for the money; it is no payment. In the 
case of Cripps v. Reade, the defendant sold a term, supposing himself 
to be the personal representative of the deceased, without executing any 
assignment. Bree v. Holbech was cited upon the trial before Lawrence, 
J., and the rule caveat emptor was urged ; the Court refused a rule for 



276 KOSS ON OOMMEKOIAL LAW. 

a new trial. Lord Kenyon, C. J., said, that in Bree v. Holbech a regu- 
lar conveyance was made, and no further covenants were to be added ; 
but in the case of Cripps v. Keade, the whole had passed by parol, and 
P^qQK-i the money had been paid under a *mistake, and the action for 
L J money had and received would lie to recover it back. 

Chambrb, J. — I really cannot entertain a doubt on the question. If 
the defendant's doctrine could prevail, it would very materially impair 
the credit of these instruments. They are not in practice indorsed, (or 
not beyond the first taker.) A man takes this security, looking to the 
persons who are to pay it; he takes it on the presumption that it is a 
navy bill ; it was once a navy bill, but from the moment wherein it was 
altered, it became of no value whatsoever. It is unnecessary to go into 
the authorities, I agree it is incumbent on the plaintiff to show quite 
clearly that the payment of the ^SSSd, 16s. lOd. was of the mere bounty 
and liberality of Grovernment, but no further. Everything that the 
plaintiffs have done has been done for the good of the defendant. There 
is no doubt whatever that the judgment ought to be for the plaintiffs. 

Dallas, J. — This is a case in which the parties are equally innocent, 
and have equal knowledge and equal means of knowledge. I have no 
doubt whatsoever of the plaintiffs' right to recover. The case falls not 
only within the general principle, that where a man has paid more than 
the thing is eventually worth, and the consideration fails, he may recover 
it back, but also comes within the express authority of Cripps v. Reade. 
Upon the ground, therefore, that the money was in part paid by mistake, 
upon a consideration that has failed, I am of opinion that the plaintiffs 
are entitled to recover it back. Judgment for the plaintiffs. 



r*SQfil *'^ BILL PAYABLE AT A CERTAIN TIME AFTERDATE OR ON DEMAND 

'- NEED NOT BE PRESENTED FOR ACCEPTANCE J BUT IF IT IS 

PRESENTED AND NOT ACCEPTED, NOTICE OF THE NON-ACCEPTANCE 

MUST BE GIVEN TO THE DRAWEE, OTHERWISE THE HOLDER WILL LOSE 

HIS RECOURSE. 

BLESARD V. HIRST. 

Nov. 20, l'?TO.— B. 5 Burr. 2670. 

This was an action brought against the defendants, who are partners 
in trade, as indorsers of a bill of exchange. The defendants pleaded 
the general issue. And on the trial it appeared in evidence, that William 
Topham of Leeds, in the county of York, on the 8th day of March 1769, 
drew a bill of exchange on Messrs. Klotz in London, bearing date the 
same day, for £B0, payable six weeks after date to the defendants or 
order, for value received, who indorsed it to the plaintiff on the 18th 
March. The plaintiff, who resided at Bradford, in Yorkshire, sent the 
bill to Lewis and Martin, his correspondents in London, who received it 
on the 21st March, and on that day, or the next day after, presented it 
to Messrs. Klotz, on whom it was drawn, for acceptance, who then refused 



BILLS or EXCHANGE. 277 

to accept it. On the 22d of April, which was the day on which the bill 
became due, it was presented by Lewis and Martin, and protested for 
non-payment. That Topham, the drawer, continued in credit till the 
11th of April; soon after which a commission of bankrupt issued against 
him ; that no notice was given of the refusal to accept the bill; but on 
the 29th of April the plaintiflf gave notice to the defendants that Messrs. 
Klotz had refused to pay the bill, and that it was returned, with charges 
of protest. On the 2d of May, one of the defendants called at the 
plaintiff's, in his way from his own house to Leeds, and told the plaintiff 
he wouldrtake up the bill as he came back; but on his return he said he 
had been advised that he was not bound to do it. Plaintiff had a ver- 
dict for £30, subject to the opinion of the Court of King's Bench upon 
the question, « Whether under the circumstances of this case the plain- 
tiff is entitled to recover ?" 

Ja. TTa^Zace for plaintiff; Jb^a 2/ee for defendants. 

The fact therefore was, that an inland bill of exchange was drawn by 
*Topham upon Messrs. Klotz, and was indorsed by the defendants |-,qq7i 
to the plaintiff, who presented it for acceptance. It was refused L ^ 
to be accepted. The plaintiff kept it in his hands three weeks without 
giving notice to the person from whom he received it, « That it had been 
refused to be accepted." Topham remained in good credit during these 
three weeks, and then failed before the time of payment came. The 
question was, " Whether the plaintiff, the holder of the bill, could recover 
of the person from whom he received it when he had thus neglected to 
give him notice of the refusal to accept it ?" 

Mr. Davenport argued it for the plaintiff ; Mr. Lee for the defendants. 

Mr. Davenport said that no such notice was necessary to be given. 
He owned that it might have been more candid to have given it, but he 
denied that the law required it. At common law, there was no need to 
present an inland bill of exchange for acceptance. The 3 and 4 Anne, 
0. 9, extends the protesting of inland bills of exchange given by 9 and 
10 William III., c. 17, for non-payment, to the case of non-acceptance ; 
but neither of these Acts take away the remedy upon the bill itself, 
which the payee before had. 

Mr. Lee said, the question was not. Whether the holder of the bill 
was obliged to present it for acceptance ? Here, he did present it, and 
it was refused, and the indorser of the bill ought to have been apprized 
of it. If any damage happens for want of notice, the person who 
neglects to give the notice ought to be the sufferer. It is a fraud to 
conceal it. Other persons may be greatly injured by such concealment. 
Topham remained three weeks in good credit ; so that the indorser might 
have saved himself if he had had notice of the refusal to accept. He 
cited Molloy, Lib. 2, c. 10, § 15, and Mareish's Advice concerning Bills 
of Exchange, 1670, p. 20, (in the small edition ;) and the case of Heylyn 
and Others v. Adamson, in my second volume, p. 669. 

Mr. Davenport, in his reply, cited 1 Lord Raymond 743, *and r,oQQi 
3 Bacon's Abridgment, 612, title, " Merchant and Merchandise," L J 
letter L., No. 7 of the protest, " A protest does not raise any debt," &o. 

Lord Mansheld observed, that this is a matter of great consequence 



278 KOSS ON OOMMEBCIAIi LAW. 

to trade and commerce, especially in this country, and at this time. 
This is an inland bill made payable to one man, and indorsed by him to 
a third man. This third man tenders it for acceptance, and it is refused. 
He keeps it three weeks, without giving any notice of such refusal to 
accept. He ought to have giren notice of this refusal, and not to have 
concealed it j and, by not giving notice, has taken the risk upon himself. 
The indorser of the bill is imposed upon. The person who neglected to 
give the notice ought to suffer for it. 

The question is not " Whether he was obliged to present it for accep- 
tance ?" He has done so, and it was refused. ' 

There is no difference between an inland bill and a foreign one in this 
case. They are both now upon the same foot. Heylyn and Others v. 
Adamson, in this Court. 

Mr. Justice Willes and Mr. Justice Ashhurst concurred in opinion 
with his lordship. They held that the holder of the bill ought to suffer 
for having neglected to give notice to the person from whom he received 
it of the drawee's refusal to accept it. And Mr. Justice Ashhurst 
added, that it was understood, upon inquiry, to be the practice of mer- 
chants, as weU as agreeable to the reason of the thing, that notice should 
be given. 

Mr. Justice Aston was gone into Chancery. 

Ordered that the postea be delivered to the defendants. 



The case of Goodall v. Dolley, 1 T. R. 712, was an action by the indorsee of 
a bijl of exchange against the indorser. The bill, which was dated 4th Nov. 
1786, was drawn in favour of the defendant, and payable sixty-five days after 
r^toQQ-i date, and was indorsed *by the defendant to the plaintififs. The plain- 
<- " i tiffs tendered it to the drawee on the 8th November, and acceptance was 
refused. The first advice given of this refusal by the plaintiffs to the defend- 
ant was by a letter dated 6th January following, which only mentioned gener- 
ally the return of the bill, without specifying the time or circumstance of its 
tender, and the drawee's refusal. The bill expired on 11th January, and on 
the following day the defendant proposed to one of the plaintiffs to pay the biU 
by instalments. Heath, J., was of opinion, that as this proposal was made 
under an ignorance of aU the circumstances of the case, which it was material 
for the defendant to know, he was discharged by the laches of the plaintiffs; 
and in consequence of a direction to that effect the jury found a verdict for the 
defendant. An application was thereafter made for a new trial, but reftised. 
Ashhurst, J., observed, — "The case of Blessard v. Hirst goes the whole 
length of deciding the present. It was there determined, that though it 
was not necessary that the holder should present the bill for acceptance be- 
fore it became due, yet if he do, he must give immediate notice to the person 
from whom he received the bill, in case it is dishonoured. Here, such notice 
was not given, and therefore the defendant was discharged. But then it is said 
^hat he made himself subsequently liable by his proposal to pay the bill by in- 
stalweats, which amounted to an acknowledgment of the debt. That argu- 
ment might as well have been urged in the case of Blesard v. Hirst as the pre- 
sent, if it had been thought niaterial ; for there the indorser absolutely proinised 
to pay the bill on his return from Leeds ; but on his being apprized that he was 
act b'omid by law, he refused. And yet that was not held as a waiver of the 
want of notice. That indeed was a stronger case than the presept ; for here 
the defendant only made a conditional offer to pay by instalments, which, being 
rejected, put matters in the same situation as if no offer had been made. The 



BILLS OP EXCHANGE. 279 

defendant, then, had a right to stand on the strict rule of law ; and by law he ia 
not bound to pay." 



*WHEEE THE HOLDER OE A BILL HAS PRESENTED IT FOR ACCEP- i-:):4nn-i 
TANOB, AND ACCEPTANCE HAS BEEN REFUSED, AND WITHOUT '" 
GIVING NOTICE TO THE DRAWER HE INDORSES IT, THE DRAWER IS 
NOT DISCHARGED. 

O'KBEFB V. DUNN. 
Juno U, 1815.— B. 6 Taunt. 304. 6 M. & S, 282. Eng. Com. Law Eeps. vol. 1. 
This was an action brought against the defendants, as the drawers of 
a bill of exchange drawn on Bicketts and Co., at one month after date, 
payable to Sinclair and by him indorsed to the plaintiffs for the non. 
acceptance of the bill by Bicketts. The defendant pleaded, that before 
the indorsement to the plaintiff, and presentment by her for acceptance, 
the bill was presented by Sinclair for acceptance and refused, and that 
the defendants had no notice given them of such refusal to accept. After 
verdict for the defendant on the issue joined on a traverse of this plea, 
Vaughan, Serjt., for the plaintiff, who at the trial before Gibbs, C. J., 
at the sittings at Guildhall, after Hilary Term, 1815, proved the facts of 
his declaration as above stated, in Easter Term obtained a rule nisi to 
enter up judgment for the plaintiff non obstante veredicto, upon the 
ground that the special plea averring no notice to the plaintiff of the 
first dishonour of the bill was insufficient in law. 

Shepherd, Solicitor- General and Lens, Serjt., in the same Term, 
showed cause against the rule, maintaining the sufficiency of the plea, 
for that Sinclair, the former holder, by his laches in not giving notice to 
the drawee of the non-acceptance, had absolutely discharged the drawer ; 
and not without reference to himself only ; and that he could not by a 
subsequent indorsement, confer on the plaintiff a right which he had 
himself ceased to possess. They cited Boscow v. Hardy, 2 Camp. 458 ; 
Blesard v. Hirst, 5 Burr. 2670 ; and Goodall v. Dolley, 1 T. E. 712. 

Yomghan and Pell, Serjts., in support of the rule, urged that a sub- 
sequent holder for a valuable consideration without notice, could not be 
prejudiced by the laches of the former holder. No person could be safe 
in receiving an unaccepted bill, if the secret neglect of a former holder 
might thus destroy its value. The doctrine would give occasion to infi- 
nite frauds. Cur. adv. vult. 
*The Judges on this day delivered their opinions seriatim. rt^nn 
Dallas, J., stated the case, and proceeded as follows : — Two L J 
points seem to be clear, first, that a bill payable at a future day, or so 
many days after date, need not be presented for acceptance, but may be 
demanded, without such presentment, when due. Secondly, That if, 
however, presentment be made, and there be a refusal to accept, notice 
of such refusal ought to be given by the party to whom it was made; 
and that for want of such notice, as between the drawer and such holder 



280 ROSS ON COMMERCIAL LAW. 

of the bill, the drawer will be discharged; if, therefore, this bill had 
continued in the hands of Sinclair, the payee, to whom the refusal to 
accept was made, and by whom no notice of such refusal was given, the 
drawer, as to him, would have been discharged; but the action is not 
brought by Sinclair, but by the plaintiflf to whom he had indorsed the 
bill, and without notice by him to her that the bill had been refused ac- 
ceptance. The question then will be. Whether she can stand in a situa- 
tion different from that in which he would have stood if he had brought 
the action? On the part of the defendants it is argued that there is no 
distinction; and this is contended, first, upon the reason of the rule by 
which the drawer would be discharged against a party knowing of the 
refusal to accept and omitting to give notice; secondly, on the authority 
of a decided case, which is said not to be distinguishable from the pre- 
sent. And first, as to the reason of the rule, the drawer is presumed to 
have effects in the hands of the drawee, and the bill is an order to appro- 
priate so much to the payee or his order. If, therefore, on presentment, 
the drawer refuse to accept, from the very nature of the transaction the 
drawer should have notice, that he may withdraw his effects, or proceed 
against his debtor, as the ease may seem to him to require. But if he 
have no effects, the reason of the rule fails, and with it the rule; and 
in such event notice is not necessary. Now, it has been contended that 
this rule cannot vary by the shifting of hands, for that the drawer is 
equally injured by the want of notice, in whatever hands the bill may 
be; and further, that when the drawer is once discharged, his responsi- 
r*df>9l ''^^i'y cannot be revived by the acts of others independent of 
L -I him. With respect to the *first part of the statement, it may be 
admitted to he true; but with regard to the latter, it is begging the ques- 
tion; for the question is, If this responsibility have ever ceased as to a 
party in the situation of the plaintiff? or rather, Whether the defend- 
ants have not agreed so to be responsible in the events which have hap- 
pened in the present case? The inquiry, therefore, must be. Whether 
an indorsee for a valuable consideration, and without notice of any ille- 
gality not making the bill void in its origin, or of any laches in the course 
of its circulation, is to be considered as receiving a bill subject to all 
that might affect it in the hands of the payee, or of a previous indorser, 
or, in other words, may not the drawer be discharged as to the payee 
becoming indorser, and yet continue liable to his indorsee? The nature 
of the contract appears to me to be this : — The drawer of a bill payable 
at a future day enables the payee, by making the bill payable to him or to 
his order, to hold out to all the world that he will pay the bill, in default 
of the acceptor, to the party entitled to present it for acceptance or pay- 
ment. He does not stipulate for himself that it shall be presented for 
acceptance, nor does the law cast such an obligation on the payee. The 
drawer, therefore, must be considered as contented to rest in ignorance 
whether it has been accepted or not, till the bill becomes due. And 
whether presented or not, depends upon the casualty of how the holder 
of the bill may choose to proceed. Any party who takes it, paying a 
valuable consideration, takes it, then, knowing that presentment for ac- 
ceptance is not necessary, and nothing appearing upon the face of the 



BILLS 01' EXCHANGE. 281 

bill to show it to have been presented and acceptance refnsed. Indeed, 
he has reason to conclude the contrary in every case in which there is 
no noting for non-acceptance, which noting would be notice on the face 
of the bill, and under such a circumstance he would act at his peril. 
Taking it, therefore, before it becomes due, and ignorant of a refusal to 
accept, he is a purchaser for a valuable consideration, without notice, 
against a party who has enabled the indorser to put off an instrument 
good upon the face of it, and by which, as far as appears, he has con- 
tracted to be bound. And considered in this light, I am of opinion, that 
from the very nature of the contract he is entitled to notice from r^-jno-i 
the party having knowledge *of the refusal to accept, and is dis- L -I 
charged for want of such notice; but that he must be taken to have 
stipulated that this rule shall be confined to such party, and not be ex- 
tended to an innocent and ignorant indorsee. On the reason and conve- 
nience of the thing, this doctrine appears to me to be equally supported. 
It can do no harm to the circulation of bills of exchange, that the holder 
should be required, when acceptance is refused, to give immediate notice 
to the drawer, and that the consequence of a neglect to do it should de- 
volve upon himself; but it would greatly clog the negotiability of such 
securities, if, upon some latent defect, and without any default in him- 
self, every man shall be taught, and so be made to feel, that in the 
moment of paying the full value of a bill, he may be purchasing that 
which may turn out to be a mere nullity. This has hitherto been con- 
fined to two or three special cases, and ought not, I think, to be further 
extended; and I will only add, that in what I am now saying, I mean 
such bills as the genuine purposes of commerce require. It may be said, 
this may be guarded against by ascertaining, before taking the bill, 
whether it has been refused acceptance or not; and this is certainly pos- 
sible, but for reasons that must be obvious, would in practice be so in- 
convenient as almost to amount to a prohibition to take any unaccepted 
bill. 

As to cases in point, I am not aware of any which are directly so, and 
will consider, therefore, next how the law stands in these which appear 
to me to be analogous. And first, in the instance of a bill indorsed over 
after it becomes due. That it is overdue, and has not been paid, appear- 
ing upon the face of it, is notice to the party who takes it, and being 
therefbre out of the common course of negotiability, he is bound to in- 
quire into the cause, and taking it without such inquiry, is subject to 
all the equities that would have affected it in the hands of former parties. 
This rests on the ground of knowledge in him, or that which is equivalent 
to knowledge, a fact amounting to notice, and demanding inquiry ; but 
reverse the fact, and suppose it a taking by indorsement before it be- 
came due, he is then an innocent indorsee, without notice of fraud or 
neglect, and entitled to recover against all those parties who, under the 
circumstance of the case, might be discharged as to each *other. r-j^AnA-, 
A drawer may therefore be released as to the payee, and yet L J 
continue liable to the last indorsee. And this appears to me in princi- 
ple to apply to the present question. It remains only to advert to 
the case cited from 12 East, and though said to be in point, I think 



282 BOSS ON COMMERCIAL LAW. 

it is clearly to be distingnkbed from the present ; the facts were 
these : — The bill had been presented by the Warrington Bank, and 
acceptance refnsed ; they gave no notice to the drawer at the time, 
nor to the party from whom they had taken it ; but kept it till due, 
and then, without notice to the indorser, who was ignorant of these facts, 
recovered against him, and when he sued the drawer, the drawer 
was held to be discharged, and the indorser to have paid the money in 
his own wrong, inasmuch as undoubtedly the bank would not have re- 
covered against him. The difference, therefore, between the two cases 
is this :— win the case cited, the bill had never passed into the bands of 
an indorsee ignorant of the refusal to accept before the bill became due, 
and while it was fairly negotiable, but remained till it became due in the 
hands of those who, from neglect to give notice could not recover. What- 
ever was a discharge to the drawer, was a discharge to the indorser; and 
the discharged indorser having thought fit to pay, when not liable, could 
not recover against the drawer what he had paid in his own wrong. In 
this case the fact is directly the reverse ; the bill, when becoming due, 
being in the hands of an innocent holder, and having been taken in a 
course of fair negotiation during the period that intervened between the 
refusal to accept and the bill arriving at maturity for payment. For these 
reasons, I am of opinion, in every view of the oaise, that this plea is not 
a sufficient answer to the action. 

ChamoBre, J., dissented from the rest of the Court, and stated the 
facts on which he grounded his opinion. This was an action by an in- 
dorsee against the drawers of a bill of exchange. The bill is dated the 
19th January 1813, it is drawn by the defendant on Ricketts and Co., 
and is payable in one month to Sinclair or order; Sinclair, after receiv- 
ing the bill, and before it was due, presented it to the drawees for accept 
tance, which they refused. Of this dishonour of the bill no notice 
r«dnfin *'^^^ given to the defendant, but Sinclair afterwards negotiated 
L J the bill by indorsing it over to the plaintiff, without communicat- 
ing to her, or any one else, that fact of refusal to accept. When the 
bill was at maturity, the plaintiff, being then in possession of it as indor- 
see of Sinclair, presented it for payment, which was ako refused, and of 
this last refusal the defendant had notice. The question arising from 
these circumstances is. Whether the action is maintainable by the plain- 
tiff against the drawers, or the drawers, by the laches of Sinclair, the 
holder and owner of the bill at the time of the first presentment and re- 
fusal, were completely discharged from their responsibility ? It is not 
contended, on the one hand, that any negligence is imputable- to the 
plaintiff personally ; or, on the other hand, that the defendants, either by 
drawing without effects, or by any other oircumstance of their conduct, 
have deprived themselves of any advantage they would otherwise be enti- 
tled to by the law of merchants on this subject. As far as appears, the 
transaction is all fair as between these pasties^ but the defendants insist 
that the neglect of the actual holder and then sole proprietor of the bill 
has wholly discharged the drawers, and left the plaintiff to seek for 
redress from Sinclair, to whom he has paid the amount of the bill, and 
who deceived him by a fraudulent concealment. There can be no doubt 



BILLS OF EXCHANGE. 283 

that a drawer is entitled, eqaally with the indorser, to notice of the dis- 
honour of the bill, either by non-acceptance or non-payment. Indeed, 
the reason for requiring such notice to the drawer may be stronger than 
it is for giving it to the indorser. The indorser has nothing at stake but 
the sum for which the bill is drawn, but the drawer, besides that risk, 
has, in fair transactions, frequently further effects in the hands of those 
on whom he draws, and a timely notice which may assist in enabling 
him to secure himself, is in such cases of more importance to be given to 
him than it is to an indorser. The consequence of the omission of any 
notice which the law requires in such case, is, that the holder and pro- 
prietor, who ought to have given it, loses the security of all prior indor- 
sers and of the drawer. Here Sinclair was the holder and owner. By 
his neglect his remedy against the drawer was lost ; it made an end of 
the drawer's responsibility at the time; and I *am at a loss to r:^in/i-i 
discover, by what means, without any act or default of their own, L J 
the responsibility can be revived. If Sinclair had no right of action 
against the drawers, how could he, by his indorsement under such cir- 
cumstances, transfer a right to another ? The case of Blesard v. Hirst, 
which was an action by an indorsee against the indorser of a bill of ex- 
change, is an express authority for the necessity of giving notice of a 
refusal to accept, and Lord Mansfield's words are^ he (the indorsee) ought 
to have given notice of this refusal, and not to have concealed it ; and, 
by not having given notice, has taken the risk upon himself. The in- 
dorser is imposed upon, and the person who neglected to give the notice 
ought to suffer for it. The question . is not, Whether he was obliged to 
present it for acceptance ? he has done so, and it was refused. The case 
of Goodall V. Dolley expressly confirms the decision in Blesard v. Hirst, 
and in both the cases the defendants had judgment, though in both cases 
the defendants had in some degree acknowledged themselves liable to the 
demand. The case of Roscow v. Hardy is more expressly in point, 
where Lord EHenborough, C. J., in giving his opinion, says, if the in- 
dorsement on the bill be once discharged by the laches of the holder at 
the time, in not giving due notice of the dishonour of it, their responsi- 
bility cannot be revived by the shifting of the bill into other hands. A 
contrary doctrine would, as it appears to me, be an inlet to fraud ; and 
the effect of the law, which requires a strict observance of its rules in the 
negotiation of bills, would be completely defeated if the holder, finding 
that he had lost his own remedy against the drawer and indorsers, could, 
by indorsing the bill to another person at any time before the day of 
payment, enable that other person to sue the drawer or prior indorsers, 
and by so doing indemnify himself at the expense of the party against 
whom he had lost his own remedy. It is true that innocent parties 
might be defrauded, while the time of payment is unexpired, and the 
negotiations apparently regular. So, a man may be defrauded in other 
transactions ; but against whom is he to seek his remedy ? Against 
those who have fraudulently obtained his money, and not by destroying 
the rights of those who have no share in the fraud. The law limits the 
responsibility of *parties to bills of exchange by certain rules for ^#40^-1 
the negotiatiou of them. I think those rules ought not to be ■- -■ 



284 ROSS ON COMMEBOIAIi LAW. 

varied by the introduction of new and unnecessary distinctions or excep- 
tions, and that, therefore, on the present case, the decision of the Court 
ought to be in favour of the defendants. 

Heath, J. — It is of the greatest importance that the negotiability of 
bills of exchange should be protected and preserved. In a few cases, 
such as gaming, usury, and the like, certain statutes make bills void in 
the hands of an innocent holder, who has his remedy over in another 
manner; but in other cases the bill is not avoided; even a bill obtained 
by the grossest fraud is not thereby vitiated. I am not for extending 
the law beyond the cases already decided. The case of Koscow v. Hardy 
proceeded on a very different ground. There the bill was paid without 
inquiry, and the defendant had a right to say, If the Warrington bank 
had sued me, I had a good defence ; the plaintiff had neglected to inquire, 
and his laches ought not to prejudice the defendant. In the present 
case, the drawer has failed in his duty ; he ought to have had effects in 
the hands of the drawee, and if he had not, the uttering the bill was a 
species of fraud. My brother Dallas has ably argued the principles to 
be deduced from the nature of the contract. I need not, therefore, en- 
large on that ground ; but I may observe, that here the plaintiff does not 
take the bill merely by virtue of a common law assignment, but also by 
virtue of the custom of merchants. I am of opinion that the plaintiff 
ought to recover. 

GiBBs, C. J. — I am of the same opinion. The distinction has been so 
well taken by my brothers Heath and Dallas, that it is necessary for 
me to say very little on this case. There are two different species of 
defence on bills of exchange. The first sort goes to show that the defen- 
dant is discharged from the claims of all persons whatsoever on that 
bill; the other sort is directed to show that the defendant is discharged 
as from the claim of a particular person. If a person takes a bill on a 
usurious stipulation, (I am not speaking of a bill originally made on a 
r*4.081 ^^'^'''<"*^ consideration, but good in its *origin, and passed to an 
L J indorsee on usurious consideration,) he cannot sue either the 
drawer or the acceptor ; but if he passes it to the hand of another inno- 
cent and ignorant indorsee for a valuable consideration, that person may 
use it against the person who indorsed it to him. So, he who takes a 
bill after it ha^ arrived at maturity, takes it subject to all the defences 
which could have been made by any previous holder; for the bill being 
unpaid, its date is notice to him sufficient to put him on inquiry ; but if 
he takes the bill before it is due, he takes it not subject to the same in- 
firmity of title, because he then takes it without notice of any suspicious 
circumstances that may break in upon his remedy against any former 
holder. This is the general law, but there may be circumstances that 
may make it otherwise. A holder is not bound to present a bill for 
acceptance ; there is nothing, therefore, on the face of an unaccepted bill 
to awaken a suspicion that it has been presented for acceptance and re- 
fused. But it is said the general law is, that where notice is requisite, 
if notice be not given, the drawer, and all persons claiming to be entitled 
to have notice of the dishonour, are discharged. I think that is a begging 
of the question. If a holder comes to the knowledge that the drawee 



BILLS OF EXCHANGE. 285 

will not accept, or Tfill not pay the bill when it becomes due, and omits 
to give notice, he shall never sue the drawer, because his neglect prevents 
the drawer from using diligence in withdrawing from the drawee the 
effects which were destined to satisfy the bill ; but I am of opinion that 
if the bill is passed for a valuable consideration without notice of that 
defect of title, he who so innocently takes the bill is not guilty of any 
breach of duty towards the drawer, and is therefore not affected by the 
omission. Roscow v. Hardy is mainly distinguishable from the present 
case, in respect that the bill there continued, up to the time of its matu- 
rity, in the hands of a holder who had neglected to give that notice at the 
time when the bill was first refused acceptance, and the holder, I agree, 
had thereby, as to his own claim, discharged the drawer. I am of opin- 
ion that the circumstance of the bill continuing in the same hand mate- 
rially differs that case from the present. I therefore think that the pre- 
sent plaintiff, not having had notice that the bill had been presented for 
acceptance '•and dishonoured before she took it, is entitled to r»jnfj-i 
recover, notwithstanding the plea that has been put on the record. L J 
The rule, therefore, must be absolute for entering judgment for the plain- 
tiff non obstante veredicto. Eule absolute. 

The defendant then brought a writ of error in the Court of Queen's 
Bench, on the ground that Sinclair having, by his laches in omitting to 
give notice of the non-acceptance of the bill, discharged the defendants 
from their liability, he could not, by his subsequent indorsement to the 
plaintiff, restore that liability. 

Gifford, for the Plaintiffs in Error, argued, first, upon a consideration 
of the mutual engagements between the drawer and the holder of a bill 
of exchange. The drawer, he said, undertakes that the drawee shall 
accept the bill, and shall also pay it at the period of its maturity; upon 
failure of either of which conditions the drawer becomes liable, provided 
ho has due notice. The holder, on the other hand, undertakes for due 
diligence in seeking payment, and giving notice of any disappointment 
which may happen in the pursuit of it. It is indeed optional with the 
holder, where the bill is payable after date, to present it for acceptance, 
or to wait until the bill arrives at maturity, relying in the interval on 
the credit of the drawer, and present it at once for payment ; but if he 
elect the former course, and acceptance is refused, he is as much bound 
to give notice of this refusal as ho would be to give notice of non-pay- 
ment, if he wait till the bill becomes due, and payment is refused ; Ble- 
sard V. Hirst, 6 Burr. 2670; Goodall v. Dolley, 1 T. R. 712 j Roscow 
V. Hardy, 2 Campb. N. P. C. 458. The reason of which has already, in 
part, been stated, viz., because, immediately on failure of the drawee to 
accept, the drawer or indorsee becomes liable ; whence it follows, that 
the drawer ought to have an opportunity, forthwith, of withdrawing his 
effects out of the hands of the drawee. Thus the mutual engagements 
between the drawer and holder of a bill of exchange requiring notice, 
the law has adopted the *rule, and discharges the drawer if notice rift-, n-i 
be not given; and it would be converting the rule of law into a L -I 
dead letter if the party violating it may, after the drawer is discharged, 
cure his own default, and, by indorsing over the bill, revive the drawer's 
Mat, 1854 — 19 



286 SOSS ON COMMERCIAL LAW. 

responsibility. It appears, however, that Lord Ellenborough thought 
differently of the rule of law, and of the means of evading it, when he 
pronounced, that « if the indorsers be once discharged by the laches of 
the holder at the time, in not giving due notice of the dishonour, their 
responsibility cannot be revived by the shifting of the bill into other 
hands." If this were a question on whom the hardship ought to fall, it 
might be enough to state, that, on the one hand, the drawers are con- 
cerned, who have already suffered by want of notice, and were not privy 
to the subsequent indorsement; on the other, the indorsee, who derives 
her title immediately by indorsement from the transgressing party, (and 
how could he confer a better title than he had himself 7) and who, by 
taking the bill unaccepted, must have done it upon the faith reposed in 
the party indorsing it, that he had done no act to discharge the security. 
The hardship, therefore, if there be any, ought to fall where the confi- 
dence was misplaced, and where the remedy lies immediately against the 
party who has abused it. As to any supposed inconvenience likely to 
result from the adoption of these arguments, it may be doubtful how far 
the unrestrained circulation of unaccepted bills ought to be placed to the 
account of public convenience, if, under that term, is comprehended a 
due regard to individual security. But however this may be, it is sub- 
mitted, in the language of the learned Judge who dissented in the Com- 
mon Pleas, "That as the law limits the responsibility of parties to bills 
of exchange, by certain rules for the negotiation of them, those rules 
ought not to be varied by the introduction of new and unnecessary dis- 
tinctions or exceptions." 

Tindal, contra, was stopped by the Court. 

Lord Ellenborough, C. J. — At a very late period, after the law- 
merchant, as it regards the subject of bills of exchange, had obtained 
r*4.in ^'"' ''^^''y centuries, the cases of Blesard v. Hirst and *Gr0odall 
L J V. Dolley were decided. I do not mean to insinuate anything 
against the authority of those decisions. They establish this, that if the 
party holding a bill of exchange receive notice of its dishonour, he is 
bound to communicate this to the drawer. But it has not yet been de- 
termined that the want of notice operates further than a personal dis- 
charge of the drawer, as against the party failing to give the necessary 
notice, nor that an innocent indorsee shall be barred of bis action by any 
latent defect in the transfer or concoction of the bill, except in the two 
cases of the bill being given on a gaming or usurious consideration. The 
inconvenience of a more extended doctrine must be apparent; for, sup- 
pose the holder to be the eleventh person into whose hands an unaccepted 
bill has passed, in succession, by indorsement, the bill arrives at matu- 
rity, and is presented, in due course, for payment, and payment is re- 
fused, and notice is given to the drawer. According to the doctrine of 
to-day, the holder is not in a condition to maintain his action, unless he 
can steer clear of any vice which the bill may have acquired by having 
been tendered for acceptance by some one of the numerous holders 
through whose hands it has passed. A long inquiry must be instituted 
through the whole series of indorsees, in order to ascertain if any pre- 
vious presentment was made, and in what manner it was dealt with. 



BILLS OF EXCHANGE. 287 

Would it be possible to conduct the negotiation of bills of exchange if 
all this investigation were necessary? What means has the holder of 
gaining this information ? Must it be obtained by private inquiry ? 
That, as it seems to me, would tend to cast about bills of exchange a 
precarious character that would aJBFect their credit, and perhaps totally 
exclude them from circulation. The cases of Blesard v. Hirst and 
Goodall V. DoUey, decided that the indorser should be discharged, hut 
that was as between the indorser and the party guilty of laches, which 
the plaintiff in both those cases was. It may be material to give the 
drawer notice, in order to enable him to withdraw his effects. This, 
therefore, may form a sound exception as against the party guilty of 
laches, but it is a very different consideration whether it shall vitiate the 
bill in the hands of an innocent indorsee, like the cases of usury or 
gaming. It is argued, that the drawer is only conditionally r.j^io-i 
^liable, if the bill be dishonoured by non-acceptance or non- ■- -I 
payment, provided he has notice. But it is no part of the condition 
that he shall be discharged quoad every holder, if the dishonour be not 
within the knowledge of the holder. Such a position, I believe, is not 
laid down in any case, and would, as it seems to me, be carrying the 
doctrine further than is necessary or convenient, involving, perhaps, the 
negotiation of bills of exchange in precarious uncertainty. The drawer 
who issues his bill into the world without procuring its acceptance, is- 
not without some degree of blame. He issues it in an imperfect state, 
and cannot justly complain of the neglect of any indorsee who takes the- 
bill in this state, being cognizant of no circumstances to vitiate it, and 
looking merely at the names upon it. Upon the whole, it appears to me 
that no authority has pronounced that a bill of exchange shall be a void 
security in the hands of an innocent indorsee, who has no knowledge- 
that the bill has ever been dishonoured, because a former holder has 
omitted to give notice to the drawer that the drawee has refused accept- 
ance ; and that such a doctrine would be destructive of the very policy 
and effect of this species of instrument, by rendering its credit of so 
precarious a nature that no person would be found willing to trust to it, 
especially if a number of names were indorsed upon it. 

Batley, J I am of the same opinion. Bills of exchange being 

negotiable instruments, a different rule applies to them from that which 
governs ordinary instruments ; so that an indorsee, bona fide and for a 
valuable consideration, may possibly stand in a better situation than the 
indorser. Usury and gaming form two exceptions to this, both affecting 
an innocent indorsee; and there is one other, where the indorsee cannot 
be said to be an innocent party, that is, where he takes a bill overdue, or 
where the bill bears on the face of it the mark of having been dishon- 
oured, as if it be noted for non-acceptance. In all other eases, although 
the want of notice may be a good defence, as against the indorser, it 
affords none as against an innocent indorsee. The drawer might avoid 
all diflSculty, by drawing the bill payable to his own order, and procuring 
an acceptance before issuing it. If he *draw it payable to a rt^io-i 
third person, and issue it in its unaccepted state, the imperfection L -■ 
lies at his door, and he must tak;e the consequence. The question beings 



288 ROSS ON OOMMEROIAL lAW. 

Whether the loss shall fall on him or upon an innocent indorsee ? it 
seems to me that the law casts it where it ought to fall. It is argued, 
that there is no hardship in casting the loss on the indorsee, because he 
received the bill on the individual credit of the indorser ; but that argu- 
ment, I think, is not supported by the premises, because an indorsee 
takes a bill, not upon the credit of the indorser alone, but of all the 
names which appear upon the bill. 

Abbott, J. — I confess it always appeared to me to be an anomaly, 
that the holder of a bill of exchange should not be bound to present it 
for acceptance, and yet, if he does present it, and acceptance is refused, 
that he should be bound to give notice to the drawer, under pain of 
having him discharged. To extend, however, the doctrine of discharge 
to a case like the present, would, in my opinion, be attended with very 
injurious consequences, as it would almost destroy the negotiation of 
instruments of this nature ; for no prudent person would take a bill of 
exchange, if it were to be subject, in his hands, to all such latent defects 
as the present. I am of opinion, therefore, that we ought not to extend 
the doctrine beyond the authorities cited. 

HoLEOYD, J. — I am of the same opinion, that there ought to be judg- 
ment for the defendant in error. This conclusion, I think, follows from 
some of the principles laid down in argument on the other side. I agree 
in the position that the drawer undertakes that the drawee shall accept 
and pay. If the holder tender the bill for acceptance, and acceptance is 
refused, he knows that the drawer is thereby defeated in his expectatioa; 
therefore it becomes his duty to give notice to the drawer, and if he 
neglects this, he is guilty of laches, and ought to suffer for his negligence 
rather than the drawer. This was the ground on which the case of 
Blesard v. Hirst was determined. But such is not the present case, 
where the bill, in its unaccepted state, has passed into the hands of a 
r«4.in *b<'°^ fi*^^ indorsee to whom no laches is imputable. Upon the 
L J principle already laid down, the drawer, in such a case, holds 
out to the indorsee that the bill will be accepted and paid ; and if this 
fails, ought he not to suffer rather than the indorsee who hath no know- 
ledge whatever that the bill has been dishonoured ? The case of Kos- 
cow V. Hardy differs from this, because there the plaintiff took up the 
bill of his own wrong, after the holder, by his laches, had discharged 
the drawer and prior indorsers, and therefore it was properly h olden that 
the plaintiff could not recover against a prior indorser. The greater 
part of the learned counsel's argument would apply to the case of a 
stolen bill, where the felon has indorsed it to a bonS, fide holder ; but 
what says the law in such case ? Not that the indorsee takes the bill 
on the individual credit of the felon, so that he must stand or fall by 
the felon's title, but that he shall recover on his own title, seeing that 
he might take the bill on the credit of all the names which appear on 
the bill. Usury and gaining consideration render the bill void in its 
original formation. I remember the case in Douglas, where the Court 
reluctantly yielded to that doctrine. This is not-the case of a void bill; 
the indorsee is chargeable with no negligence, and I therefore think that 
the drawer is still liable. Judgment af&rmed. 



BILLS or EXCHANGE. 289 



A BILL PAYABLE AT A CERTAIN TIME AFTER SIGHT MUST BE PRE- 
SENTED FOR ACCEPTANCE WITHIN A REASONABLE TIME, AND THE 
QUESTION, WHETHER REASONABLE DILIGENCE HAS BEEN USED, 
WILL DEPEND ON THE PARTICULAR CIRCUMSTANCES pP EACH CASE. 

I. — MUILMAN V. D'EQUINO. 

Not. 25, 1195. — E. 2 H. Bl. 565. 
Debt on bond, the condition of which, after reciting that Chamberlain 
Goodwin had, on the 5th of March, 1793, in London, drawn five sets of 
bills of exchange, four in each set, on "Major William Palmer, ^^ ,, -.. 
at the house of Messrs. Palmer and Tucker, at Calcutta, payable L J 
to the defendant or order sixty days after sight, and by him indorsed to 
the plaintifiFs, was, that if the said five sets of bills of exchange, or any 
one bill of any or either set, should be returned and come back to Eng- 
land, duly protested for non-payment, no one bill of that set having 
been paid, and if the said Chamberlain Goodwin, or the defendant, or 
either of thom, their, or either of their executors, &o., should and did 
within thirty days next after the said five sets of bills, or any one bill 
of any or either set so returned protested for non-payment, should be 
produced with a regular protest for non-payment to the said Chamberlain 
Goodwin and the defendant, or either of them, their executors, &c., or 
notice thereof in writing left at their, or either of their, usual place of 
abode, pay to the plaintiffs the full amount of such bill or bills of ex- 
change as should be so returned with protest, &c., then the obligation to 
be void, &c., which being read, &c., the defendant pleaded ; — 

1. That not any one bill of exchange of any or either of the said five 
sets of bills, had been returned and come back to England, duly pro- 
tested, within the true intent and meaning of the condition. 

2. That the defendant had well and truly paid to the plaintifis within 
the time in the condition mentioned, the full amount of such of the said 
bills as had been returned with protests for non-payment, &c. 

3. That by reason of the neglect and default of the plaintiffs, not any 
one bill of any of the said five sets was presented or shown to the said 
Major William Palmer, at the house of Messrs. Palmer and Tucker, at 
Calcutta, or at any other place, within a reasonable time next after the 
drawing and indorsing of the same respectively. 

4. The same in the former part as the third, with the addition, that 
by reason of the premises, the defendant had not notice so soon as he 
otherwise would and ought to have had, that the said Major William 
Palmer would not accept or pay the said bills, or any of them. 

6. That all the bills of the said five sets, which were returned and 
came back to England protested for non-payment, were *so re- r^^ic-i 
turned, and so came back through the default of the plaintiffs. <■ -* 

Beplication. — 1. That one bill of each of the five sets had been re- 
turned and come back to England, duly protested for non-payment, 
within the true intent and meaning of the condition, concluding to the 
country. 



290 ROSS ON COMMERCIAL LAW. 

2. That the defendant had not paid to the plaintiflfe within the time 
in the condition mentioned, the full amount of such of the bills as had 
been returned with protests, &c., with the same conclusion. 

3. That one bill of each set was presented to Major William Palmer, 
at the house of Palmer and Tucker, at Calcutta, within a reasonable 
time after the drawing and indorsing, &c., with the same conclusion. 

4. That one bill of each set was presented to the said Major William 
Palmer, at the house of Palmer and Tucker, at Calcutta, within a reason- 
able time after the drawing and indorsing, without any default of the 
plaintiff, with the same conclusion. 

5. That all the bills of the five sets which were returned and did come 
back to England protested for non-payment, were not so returned, and 
did not so come back to England, through the neglect or default of the 
plaintiffs, with the same conclusion. 

On these issues a verdict was found at Guildhall for the plaintiffs, the 
following being the facts of the case. On the 5th of March, 1793, the 
bills were drawn by Goodwin on Palmer in Calcutta, in favour of the 
defendant, and on the same day indorsed by him for their full value, in 
a course of negotiation on the Koyal Exchange, to the plaintiffs, who had 
previously received directions from Biderman and Co. of Paris, with 
whom they had a correspondence, to procure bills on India. The plain- 
tiffs then sent advice to Biderman and Co. of their having procured the 
bills, and at the same time drew on Biderman and Co. for the amount of 
them, by way of indemnifying themselves, and requested further orders 
as tq the persons to whom the bills in question should be indorsed. On 
the 17th of March in the same year, Goodwin wrote general letters of 
advice to the drawee, which were sent on board an East India ship, 
r*4.l7n ^^^°^ sailed with several others from Spithead on the *5th of 
L J April, and arrived at Calcutta early in September. On the 19 th 
of April, Goodwin stopped payment. On the 30th of April, four of the 
bills were indorsed by the plaintiffs, (by the direction of Biderman and 
Co., from whom they had heard in the meantime, and who had paid the 
bills which the plaintiffs had drawn on them as an indemnity,) to the 
order of Deverin of Calcutta, and the fifth to the order of Pelon of the 
same place, for value in account with Biderman and Co. On the 22d 
of May the bills were sent to India, by another fleet of Indiamen, which 
sailed on that day, and arrived in the Huguely river on the 3d of Octo- 
ber. On the 5th of October the holder of the bills wrote to the drawee, 
who was not then at Calcutta, informing him of the arrival of the bills, 
and requesting his acceptance of them, which by letter of the 17th of 
October he refused. In consequence of which four of the bills were pro- 
tested for non-acceptance on the 29th of October, and the fifth on the 
18th of November, 1793. Four were protested for non-payment on the 
1st of December, 1793, and the fifth on the 3d of January, 1794, and 
were all returned by the first English ships which sailed from India on 
the 23d of February, and arrived in England in July, 1794. But it 
also appeared, that the plaintiffs had received, by the accidental convey- 
ance of a foreign ship not bound to England, a letter from their agents 
at Calcutta, (with whom the holders of the bills had a constant com- 



BILLS OF EXCHANGE. 291 

munication,) dated 11th December, 1793, respecting some other bills, 
but which was totally silent as to the bills in question . 

A rule having been granted to show cause why there should not be a 
new trial, the Lord Chief Justice 'reported the evidence as above stated, 
and said, that at the trial, the material questions he had left to the con- 
sideration of the jury were, whether the bills were presented to the 
drawee in reasonable time, which includes the question whether they 
were sent from England in reasonable time, and also whether proper 
notice had been given to the defendant of their non-payment. That 
his lordship was of opinion that there was no rule of law to fix the time 
when foreign bills should be sent to their place of destination, and that 
the jury was to determine what was *reasonable time for that r-^A-io-i 
purpose. That under the particular circumstances of this case, L J 
he thought the bills had been transmitted in reasonable time to India, 
having been originally put up on the Exchange for negotiation, and 
therefore liable to be delayed here, and purchased by the plaintiffs as 
the agents of Biderman & Co., who were to give their orders for the 
disposal of them. As to the time of their being presented in India 
after their arrival in that country, there was no evidence to show that 
they were not presented in reasonable time, and it must be always in the 
discretion of the holder of bills drawn payable at sight, or a certain time 
after, at what time they should be presented. That with respect to the 
notice of the bills being dishonoured, it appeared that due notice of that 
circumstance had been given to the defendant in this case ; for it would 
be too strict a rule to lay it down that the party in India should be 
bound to send notice to England, by the chance conveyance of a foreign 
ship, and that in this instance notice had been sent by the first regular 
ships which sailed from Bengal to this country. 

Le Blanc, Sergt., in showing cause, repeated in substance the obse 
vations of his lordship to the jury. 

Adair and Haywood Sergts., on the other hand, contended, that due 
diligence had not been used (which it was necessary in all cases for the 
holders of bills of exchange to use) either in sending their bills to India 
by the first ships which sailed from England after the indorsement to 
the plaintiffs, and which delay was occasioned by their seeking an indem- 
nity for themselves from Biderman & Co. ; or in presenting the bills in 
India for acceptance, which might and ought to have been done by the 
holders, without waiting for the drawee's letter of the 17th of October, 
as his residence was known, though he was absent from Calcutta ; or in 
returning them as soon as possible to England, with due notice of their 
non-payment; for it was evident that the plaintiffs' agents or the holders 
of the bills in India, did not avail themselves of the same opportunity 
which the foreign ship offered of sending the letter of 11th of Decem- 
ber, also to send bills protested for non-payment. 

*Lord Chief Justice Byre The course of the argument in r^-^jg-i 

this case does not call upon the Court to lay down any new rule L -■ 
as to bills of exchange payable at sight, or a given time after ; if it did, 
and it were necessary, I should feel great anxiety not to clog the negoti- 
ation of bills circumstanced like the present. It would be a very 



292 ROSS ON OOMMEROIAL LAW. 

serious and difficult thing to say, that a person baying a foreign bill, in 
the way that these bills were bought, should be obliged to transmit it by 
the first opportunity to the place of its destination. There would also be a 
great difficulty in saying at what time such a bill should be presented 
for acceptance. The Courts have been very cautious in fixing any time 
for an inland bill payable- at a certain period after sight, to be presented 
for acceptance, and it seems to me to be more necessary to be cautious 
with respect to a foreign bill payable in that manner. If instead of 
drawiflg their foreign bills payable at usances, in the old way, merchants 
choose for their own convenience to draw them in this manner, and to 
make the time commence when the holder pleases, I do not see how the 
Courts can lay down any precise rule on the subject. I think indeed, 
that the holder is bound to present the bill in reasonable time, in order 
that the period may commence from which the payment is to take place. 
The question, what is reasonable time, must depend on the particular 
circumstances of the case ; and it must always be for the jury to deter- 
mine, whether any laches is imputable to the plaintiff. With respect 
to point of notice of the non-payment being delayed, I think there is 
no colour for that part of the argument; for I hold that it is sufficient 
for the party in India to send notice by the first regular ships going to 
England, and that he is not bound to accept the uncertain conveyance 
of a foreign ship. 

But upon the whole, my opinion proceeds on the facts of this particu- 
lar case; I am satisfied with the finding of the jury; the question whe- 
ther there had been any laches was left to them, which it was for them 
to decide, and they have found that no blame was to be imputed to the 
plaintiffs. 

BuLLEE, J. — This case may be decided on the facts peculiar to itself, 
r*4.9m ^i*^""* infringing any rule of law. The only rule *that I 
L J know of, which can be applied to all cases of bills of exchange, 
is that due diligence must be used. Due diligence is the only thing to 
be looked at, whether the bill be a foreign or an inland one, and whether 
it be payable at sight, at so many days after, or in any other manner. 
And the learning on this point is well laid down by Lord Mansfield in 
Heylyn v. Adamson, 2 Burr. 669. Then the question is. Whether due 
diligence was used by the plaintiffs in this ease ? Upon all the facts, 
the jury have found that there was no laches in the plaintiffs, and there 
is nothing in the state of those facts, as they appear upon the evidence, 
to warrant the Court to say that the verdict is against law. But here I 
must observe, that I think a rule may thus far be laid down as to laches, 
with regard to bills payable at sight or a certain time after sight, namely, 
that they opght to be put in circulation. If they are circulated, the 
parties are known to the world and their credit, is looked to ; and if a 
bill drawn at three days' sight were kept out in that way for a year, I 
cannot say there would be laches. But if instead of putting it in circu- 
lation, the holder were to lock it up for any length of time, I should 
say that he was guilty of laches. But further than this no rule can be 
laid down. With respect to the notice, it was clearly sufficient to send 
it by the^ ordinary mode of conveyance. I do not say that the party 



BILLS OF EXCHANGE. 293 

was bound to send the protest by an English ship, but it was enough to 
do so by the fir&t ship, whether English or foreign, that was going to 
England in the regular course of conveyance. 

Heath, J. — Of the same opinion. No rule can be laid down as to 
the time for presenting bills drawn payable at sight, or a given time 
after. In the French Ordinances of 1673, Postlethwaite's Diet. tit. 
Bills of Exchange, it is said that a bill payable at sight or at will is the 
same thing; and this agrees with Marius. 

RooKE, J., of the same opinion. Bule discharged. 



*IL— HELLISH V. RAWDON. [*421] 

Nov. 26, 1832— E. 9 Bing. 416. Eng. Com. Law Reps. vol. 23. 

This was an action brought by the holder against the drawer of a bill 
of exchange, addressed to Guimarroens at Rio de Janeiro, and payable 
at sixty days after sight; the rate of exchange, at which the bill was to 
be paid, being fixed, by indorsement on the bill, at 22d. per milrea. 

This bill had, by the defendant's order, been oflFered for sale in the 
money market, and was purchased by the plaintiff on the 10th of Sep- 
tember 1830, at which time the rate of exchange was at the amount 
indorsed on the bill. 

The plaintiff kept the bill in his own hands till the 1st of February 
1831, when it was again sold by him in the market, and put into cir- 
culation. 

Guimarroens having failed before the bill reached Rio, the plaintiff 
was obliged to pay a subsequent indorsee the amount, and now sought 
to recover it of the defendant, the drawer. 

Immediately after the bill came into the plaintiff's hands the rate of 
exchange began to fall, and by the 1st of February, 1831, had fallen 
from 22d. to ll^d. 

It was proved at the trial that foreign bills were constantly bought 
and sold in the market for the purpose of speculation, and that this 
course of business was so general, that the defendant could not but know 
that it existed. 

There was no evidence of any such unvarying course having been 
observed with respect to foreign bills payable at a given time after sight, 
as that the holder should send them forward for acceptance within any 
certain time, as by the first or second packet which sailed after they 
came into his hands ; on the contrary, there was conflicting evidence of 
the judgment and opinion of merchants on that point, some stating that 
such was their understanding of the course and practice, others stating 
that they understood foreign bills were usually kept, without being 
forwarded for acceptance, as long as it suited the convenience or interest 
of the holder. 

But it appeared, that where drawers of foreign bills payable at any 
time after sight, are desirous of limiting the time o